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Benjamin Graham on Buffer Stocks

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  • Woods, John E

Abstract

Surprisingly, Benjamin Graham, the acknowledged “Father of Value Investing”, considered his most important work to be the invention of the Commodity Reserve Currency Plan during the 1930s and 1940s. Previous studies of the Plan have overlooked the fact that, of its three main components (buffer stocks, price stability and currency–backing), Graham regarded the first as the most important and the other two as “secondary” or “subsidiary”. By focusing on the buffer–stock aspect, we demonstrate, first, the breadth and depth of Graham’s overall conception in terms of both micro– and macro-economics and, second, the considerable overlap with Keynes’s ideas developed around the same time, which are manifested particularly in their common conclusion that the inefficiency of commodity markets could be rectified only by government intervention. We also comment on Mehrling’s assessment of Graham as “not any kind of economist at all” (JHET, 2011).

Suggested Citation

  • Woods, John E, 2021. "Benjamin Graham on Buffer Stocks," OSF Preprints qdv3n_v1, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:qdv3n_v1
    DOI: 10.31219/osf.io/qdv3n_v1
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    1. Maria Cristina Marcuzzo & Eleonora Sanfilippo, 2016. "Keynes and the interwar commodity option markets," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(1), pages 327-348.
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    5. Leanne Ussher, 2009. "Global Imbalances and the Key Currency Regime: The Case for a Commodity Reserve Currency," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 403-421.
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    7. J. E. Woods, 2013. "On Keynes as an investor," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(2), pages 423-442.
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