How can we avoid macroeconomic problems, such as hyperinflation, long periods of high unemployment, or international financial crises?
For hyperinflation, there is a consensus in the economics profession that the problem comes from letting the money supply get out of control, which in turn comes from a government that cannot finance its desired level of spending by taxes and borrowing, and attempts to print money at a faster and faster rate to pay for goods and services. The other topics are highly controversial within the profession. The Keynesian ideas that I favor are by no means supported by a consensus. In Keynes Then and Now I wrote Keynes also challenged what I call the Fundamental False Theorem (FFT) of economics. The FFT states that there can be no involuntary unemployment. It is easy to show that if markets are well behaved, there will never be instances of large and persistent excess supply. This rules out excess supply of labor, that is, involuntary unemployment. Another point of Keynesian heresy concerns the role of expectations. In Future Uncertainty and Present Indeterminacy, I wrote Keynes focused on t