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Investment (saving) under the mattress yields only the psychic value of liquidity. Actual capital growth depends on rate of return as much as amount invested. If return holds the same as it was before, growth and net ex ante investment will be equal. Growth will be less than consumption foregone (remembering the asterisks) if return drops, and more if return rises. Keynes saw slumps as investment deficits. I see them as return deficits. Keynes assumed uncritically, I think, that new investment is the path out of slumps. Investment will come when prospects of return do. Although the General Theory was published three years before Myrdal’s ex ante - ex post distinction, Keynes would have realized the same thing. I think he made the understandable mistake of supposing that the difference would balance out as random noise. The charts and tables show otherwise. The optimum ex ante investment target is enough to offset realistic depreciation exactly. Keynes was a great thinker, a lively writer and a decent man. | happen to endorse some of his policy ideas. So did my father. When I asked him what he thought of fiscal policy, I expected something like Hawtree’s “crowding out” argument: government investment preempts and prevents private investment. I got a surprise. My father said “When people are out of work, that’s the time to build a new post office.” It is, if you need a new post office, because returns can be higher when contractors strapped for options bid construction cost down. But it is no disrespect to point that the General Theory was published 80 years ago. | tend to support Keynes on some points, for example the usefulness of fiscal policy in relieving slumps, but to agree mostly with Mises on their causes in the first place. Where | differ from both is in the fundamental anatomy. Chapter 8 Banks, Money and Macroeconomics 2/8/16 16 HOUSE_OVERSIGHT_011105