Of all the economists and economic thoughts that still commands a great deal of respect from the investor community, it’s indisputably Keynes and Keynesian Economics. Though his contribution to investment thought is not widely acknowledged, Keynes was arguably the foremost hedge fund manager. My first attempt at reading Keynes started with his seminal work "The General Theory of Employment, Interest, and Money" and I must admit I could follow very little. “Essays in Persuasion” by contrast is not targeted at the trained economist and is much easier to comprehend.
“Essays in Persuasion” is a collection of Keynes’ writings that argues for an alternative course/remedy for the then prevailing Economic Problems. From a contemporary standpoint, “Inflation and Deflation” (Chapter II) and “The Return To The Gold Standard” (Chapter III) makes a compelling read. It is indeed the genius of his arguments/prescription that makes them equally relevant to our current economic woes.
To give more credence to the contemporary appeal of the book, I leave you with few excerpts from the book:
“To bring up the bogy of inflation as an objection to capital expenditure at the present time is like warning a patient who is wasting away from emaciation of the dangers of excessive corpulence”
“Deflation is even worse than inflation. Both are “unjust” and disappoint reasonable expectation. But whereas inflation, by easing the burden of national debt and stimulating enterprise, has a little to throw into the other side of the balance, deflation has nothing”
“Thus inflation is unjust and deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflation such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier”
“A probable expectation of Deflation is bad enough; a certain expectation is disastrous. For the mechanism of the modern business world is even less adopted to fluctuation in the value of money upwards than it is to fluctuations downwards”