John Maynard KeynesJohn Maynard Keynes, (1883-1946) British economist

John Maynard Keynes Quote

“If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is.”

John Maynard KeynesJohn Maynard Keynes
~ John Maynard Keynes

The General Theory of Employment, Interest and Money (London: Macmillan, 1936), p. 129.

Ratings and Comments

Yndrd1984, Ames, IA

Maybe I misunderstood him, but this sounds insane. Can anyone help?

Tony D., Toronto, Ontario

Absolute rubbish! Where's the productivity, efficiency in this task? There's absolutely no economic benefit, just economic waste. That productive capacity is just being wasted on something stupid, instead of being employed on producing real things to the benefit of society. It's like someone digging a hole then someone else closes it up, then for GDP purposes you've got two incomes earned, but economically you've just wasted labour and capital.

Kevin, Kansas City
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Kevin, Kansas City Tony D., Toronto, Ontario 10/25/20

It should not be lost on anyone the intent in leaving off the last sentence of the quote: "It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."

That intent being to mislead the reader as to the actual Keynesian argument. In the first part of the quote Keynes is being somewhat facetious in drawing an analogy to essentially unproductive economic activities like gold-mining or waging war which none-the-less can have a stimulative economic effect. His principal conclusion however is that the ideal solution to unemployment is for the government to be the employer of last resort. Identify some productive activity which the private sector is not engaged in and have the government put unemployed people to work doing these productive activities.

E Archer, NYC
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E Archer, NYC Kevin, Kansas City 10/25/20

I don't see the contradiction.  The following sentence not included in the quote does not negate it, nor is it evidence of an intent to mislead the reader.  The government being the "employer of last resort" would be nothing more than the Fed being the "lender of last resort"  the Fed now being the issuer of all currency for the country, why would government labor not do the same thing?  A central bank creating money out of nothing and then charging interest for it is the very core of communism.  And Keynes well knows it.
Keynesian government is a labor racket! Paper pushers, administrators, regulators, collectors, counters, and all the support staff required -- producing NOTHING, consuming almost everything. And that's what governments have become.

Tony D., Toronto, Ontario

We don't need work, for work's sake, people need work to produce real things! If Keynes's theory were right then the Soviet Union would still exist and be the most prosperous country on earth!

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Anon    2/2/09

Leave the bank notes right where they are which is what they are anyway, rubbish! I think Keynes is telling a private joke in public and laughing about it afterwords. He's seems to be mocking the gullibility of people who, unfortunately, would happily believe his rubbish.

Mike, Norwalk

Well said Tony and Anon

Bryan Morton, Stuart, FL

Man, what was that dude smokin'?

E Archer, NYC

Leave it to Keynes to relegate 'laissez-faire' to competing for government monopolies. And the worse thing is that Keynesian Economics is the model the US is following unabashedly. It is absolutely a very real strategy that is being followed with the intent to enslave the citizens of the world. It is working very well -- well enough even that the slaves are so dependent on this system now that to break free would mean official war between the fascist rulers with their armies of dumbed-down, dependent, collectivist supporters and the very few knowledgable citizens whose powers have been minimalized through the theft of their property and labors.

A.WOODS, Gloucester

It would help if Keynes had explained how make-work sh#t details on such a scale could increase a community's real income and capital wealth. Must be those helpful repercussions, whatever they are.

Blue, Fredericksburg, Va

Unfortunately, we have people in this country that are so afraid of unemployment that such a suggestion makes sense to them. Likely many of Keynes ideas are similarly insane, but being subtler, they are accepted as fact.

Jay S., Boston

It's amazing to me how many people don't understand the simple genious of Keynes. Of course this works, it's what made the US the most prosperous country in history after the depression. It's been proven many times since. Demand for goods and services increases once people have money to spend regardless of how they earned it. In response to increased demand companies hire the people who dug the hole. Now more people have productive jobs and keep the economy churning. Like Richard Nixon said, "We are all keynsians now." That's because it works.

E Archer, NYC

But, Jay, what Keynes is talking about above is not how it is. The Keynesian system only works for those pulling the strings. If the system works so well, why is the country in the worst financial mess since the last time the Fed crashed the economy? It doesn't work -- it is legalized theft and has made the BANKS the most profitable in the world, and only those who can get access to the tremendous lines of credit the banks offer can be profitable. But consider this, instead of digging for buried money, which produces nothing, why not build bridges, promote agriculture, manufacture goods? Without real production, we are merely moving money around until it is consumed by the banks again.

Pat, RI
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    Pat, RI    11/24/09

    Keynes was telling a joke. Of course he doesn't think that burying bank notes would be a good idea. Instead he thinks money is better spent on infrastructure, hospitals, and anything that would provide a social benefit at the same time as revitalization the economy. The important thing is to spend money, if the private sector is unwilling to do so then the money must come from somewhere else. He is mocking the neo-classical economists who would have been opposed to government spending, like the new deal. He is saying if you are unwilling to go down the road of the government spending then we will go with this ridiculous idea that fits into the free market economics, and accomplish the same thing the government spending will.

    J, MO
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    J, MO    2/27/10

    Pat is absolutely right. The above quotation is from general theory, left out the last bit: "of course it would be more sensible to build houses and the like, but if there are political and practical difficulties in the way of this the above would be better than nothing." The argument is that the government has the ability to create demand, and it should exercises this ability instead of allowing a country to fall into a depression. Here are the roots of the modern stimulus. But for Conservatives who don't like this idea, remember that keynes came up with the idea that reducing taxes produces greater productivity so you cant say he was all wrong. Same for Marxists, as much as he favored the power of markets (as do most modern socialists) he also saw large roles for government intervention in favor of labor. Who know's if he's right or wrong but he isn't suggesting making people dig through garbage for wads of cash. At one point he also talks about how ancient Egypt only had two industries, which seemed to be pyramid building and finding gold, and that seemed to do alright for them.

    R, Boston
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      R, Boston    9/3/10

      " Egypt only had two industries, which seemed to be pyramid building and finding gold, and that seemed to do alright for them. " Egypt ran on slaves...

      Tom, Des Moines

      The point was that when private enterprise cannot find an efficient way to create capital through productive endeavors, the government can. This example is not a crux of Keynes general theory. This example is to point out a key problem with free market economies; that due to uncertainty and risk aversion, venture capitalists are hesistant to invest. In this example, entrepreneurs and private enterprise would be foolish to not employ the tools the free market affords them to draw this capital from the ground. I find it funny people find the idea of extracting something valuable from teh ground that has little true utility that silly of an idea; people do it all the time with gold and diamonds. The demand for gold and diamonds provides the incentive, just as the demand for bank notes would provide the incentive in this case.

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      mt    1/8/11

      just silly

      Brent, Gis

      How can you come up with something so stupid and then publish, this is a new low.

      J Carlton, Calgary

      Keynes also said " I work for a government I despise to ends I think crimimal". A couple of people here suggested that if private enterpries is "unwilling" to spend or produce capital...The only thing that makes private enterprise unwilling is government intervention in the first place. The government has NO Business IN Business. None.

      Brian, Brooklyn

      The Keynesian theory was given one of the largest clinical trials in history: WW 2. We employed people producing material of no earthly civilian use, much of which we dumped when the war was over. Result: employment and prosperity.

      Keynes made clear that he would rather use the newly created employment to produce something useful, but he thought the politicians were too dumb to do so. He was right

      E Archer, NYC
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      E Archer, NYC Brian, Brooklyn 10/25/20

      Booms and busts  that is what a fiat currency borrowed into existence promotes, while the bankers get a piece of the action in both directions.  Expansions and contractions in the money supply are what cause these booms and busts.  Bankers practically give the new money away in the beginning, then end up seizing massive amounts of property from those that had the musical chair pulled out from them.  Over and over and over  such that the nation's entire money supply is being rented in perpetuity, the only change being the negotiation of the terms of a forever unpayable debt.  That's the game.

      Glen Contrarian, Seattle, WA

      Keynes was absolutely right. As Pat said above, the key is for the government to pay the people to build that which benefits the community. The people then have money to spend, and so the local businesses profit and grow...and all the while the people and the businesses pay taxes which refund the government for its initial investment. Of course that's a gross oversimplification, but that's the basic idea...and it works. That's why ALL first-world democracies are socialized democracies with high taxes, strong regulation, and a significant social safety net.

      E Archer, NYC
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      E Archer, NYC Glen Contrarian, Seattle, WA 10/25/20

      The good intentions are the selling point.  However, this system puts the power of a nation into a single hand  whoever controls the issuance of currency controls the nation.  American colonists issued their own script interest-free  it is telling that the British soon sent their military.  Abraham Lincoln also issued currency interest-free  he did not survive the War, and neither did the Greenbacks.  Understand that the central bankers call themselves Governors  because they DO govern.  Whoever has the gold makes the rules, and all the 'money' coming from them have terms and conditions for its use.  Yes the British monarchy has many glorious accomplishments using the same techniques as Keynes  indeed, you must have the power to declare your word as good as gold.  In England the word of the King is law.  In America, there are not supposed to be Kings or rulers  WE are each the sovereigns without any subjects.  When we have the Chairman of the Federal Reserve declare how much it will cost to rent money this year  and how much you owe of the unpayable debt  you have a governor of all, rich and poor.  They own your 'obligations' to them and you will pay or else.  History tells the tale.

      Anonymous, Korolev

      "the above would be better than nothing"

      Wrong, for sure . But burning banknotes will decrease the inflation, if nobody will redigg it.


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