Keynes on the US Bankbailouts

Here are some thoughts — via Keynes — on liquidity, uncertainty, and valuation for (hopefully!) a chapter in an edited collection on Sub-Prime and the Political Economy of Global Finance.  The text is an updated version of a paper presented at the International Studies Convention in New York in February 2009.

It’s a first stab at restoring a Keynesian (or rather a Post-Keynesian) approach.  Hopefully this is the first of a number of such attempts.  This one focuses on the recent attempts by the US Treasury to restore financial health.  The argument is that by reducing the problem of uncertainty to a technical problem rather than a persistent condition of life and the economy (a la Keynes and Jacqueline Best), the bank bailouts will re-institutionalise the fetish of liquidity, reduce investment elsewhere  and continue the naive belief in market rationality.

Click here for a copy of the paper.

As always, comments are very very welcome.