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Keynes and Government

2. Keynes held that there is a role for government within a laissez-faire market economy. According to Keynes, government should seek to achieve institutional complementary with the private sector. In essence, the goals of government should be in concert with the goals of the private sector. Thus those economies (such as Britain and the United States) which fully embraced Keynes during the post World War II era did so with the objective of creating an environment in which the market economy could thrive.

This means that regulation and government intervention takes place, with the government responsible for maintaining full-employment without inflation. Keynes also had the reduction of income inequalities as one of his goals for the state, but income disparity continues to be rife within those economies which embraced Keynesian economics. Under Keynes' vision, governments would assume central controls which would control economic factors such as the rate of taxation, interest rates, and through the government as consumer (public works). Keynes also held that governments should become more active in the investment market using communal savings during depressed economic times to provide economic stimulus through investment. Keynes also urged that governments manage their monetary systems outside the gold standard, a suggestion which led to the Bretton Woods conference and the eventual abandonment of the gold standard by major industrial nations, including the United States, by the end of the twentieth century.

The United States lacks a central bank which is run by the government, but the Federal Reserve Board controls interest rates by controlling the rates at which member banks can borrow from one another. This monetary approach was used with considerable success by Alan Greenspan during the 1990s as the Fed brought interest rates down and the United States entered a period of very low inflation.

Both the United States a...

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Keynes and Government. (1969, December 31). In LotsofEssays.com. Retrieved 19:07, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1688691.html