Wednesday, May 29, 2013

Banker's views of Keynesian economics

Randolph Burgess, a president of the American Bankers Association (ABA) and later Under Secretary of the Treasury in the Eisenhower administration, wrote in a letter to Harry Dexter White on the creation of what eventually became the International Monetary Fund (IMF), the following:
"The interpretation of the fund as a means for expansion rather than for stabilization is encouraged by Lord Keynes' address before the House of Lords. It sounds like the philosophy of deficit spending over again, - the use of credit as a cure-all."
Bankers were not very fond of deficits and full employment, then and now. They wanted a smaller fund, with currencies tied to gold (presumably the dollar, like White wanted and got it), to avoid inflationary pressures. An anti-Keynesian IMF. And it seems that bankers got basically what they lobbied for. By the way, bankers have been lobbying for watering down all the regulations associated with Dodd-Frank and the so-called Volcker Rule in the last few years. How well do you think they fared this time around?

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