My view of Keynes's vision of the economy in the General theory is that one person's income is another person's spending and one's spending is another's income. That means that once spending falls, income falls, which reinforces the spending decline. ...

The interest rate will not generally fall sufficiently to cause investment to recover as it is not just determined by demand for savings by investors, but co-determined by conditions in the money market. That means that the decline in income is an equilibrium and ...

An underemployment equilibrium results. To respond, spending and thus income must recover. But ultimately the economic problem arises from a decline in income which is self reinforcing. Naturally the response should be tailored to try to preserve income rather than employment ...

which may expose more people to disease right now. But all the income transfers in the relief/stimulus bill are exactly what a Keynesian response would look like: preserve income flows so that spending does not fall permanently creating an underemployment equilibrium. I'm ...

seeing a lot of takes that the response should not be a traditional Keynesian response to a recession, but while thedetails should be tailored to the pandemic, the response absolutely should be along Keynesian lines: we cannot just hope that the economy will naturally rebound FIN