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Keynesian parables of thrift and hoarding

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  • Nicholas Rowe

    (Carleton University, Canada)

Abstract

I argue that Keynes missed seeing the importance of the distinction between saving in the form of money ('hoarding') and saving in all other forms ('thrift'). It is excessive hoarding, not excessive thrift, that causes recessions and the failure of Say's law. The same failure to distinguish hoarding from thrift continues from The General Theory into the IS–LM model and into New Keynesian macroeconomics. On this particular question, economists should follow Silvio Gesell rather than John Maynard Keynes. The rate of interest in New Keynesian models should be interpreted as a negative Gesellian tax (that is, a subsidy) on holding money issued by the central bank.

Suggested Citation

  • Nicholas Rowe, 2016. "Keynesian parables of thrift and hoarding," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(1), pages 50-55, January.
    • Handle: RePEc:elg:rokejn:v:4:y:2016:i:1:p50-55
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    Citations

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    Cited by:

    1. Alain Béraud & Guy Numa, 2019. "Retrospectives: Lord Keynes and Mr. Say: A Proximity of Ideas," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 228-242, Summer.
    2. Pingle, Mark & Guerrero, Federico & Mahmoudi, Mina & Wuthisatian, Rattaphon, 2023. "A Descriptive Growth Model with Unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 482-500.

    More about this item

    Keywords

    Keynes; Gesell; saving; thrift; hoarding; deficient demand; money; monetary exchange; barter;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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