A Tract on Monetary Reform

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   The comfort of long-run explanations helps no one who must decide now: economic policy and choices are judged by what they do in the present storm, not by the equilibrium beyond it.

   A Tract on Monetary Reform · 1923

   Waiting for long-run equilibrium does not undo the transfers of wealth happening now, in the storm.

   Keynes attacks the habit of economists who wave away urgent problems with the promise that, in the long run, markets equilibrate by themselves. People live the effects of inflation, unemployment, and monetary instability now, he argues, and postponing remedies has real costs distributed unfairly. The mechanism he sees is that prices and fixed debts transfer wealth between generations and classes during the storm, and waiting does not undo those transfers. His example is post–World War One Europe, where inflation eroded small savers' holdings while holders of real assets came out ahead.

   “In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.”

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