Keynes and capitalism one more time: A further reply to hill
Abstract Greg Hill continues to miss my distinction between what is true of free‐market capitalism and what is true of the interventionist forms of capitalism that characterize Western economies. It is central banking that triggers lower aggregate demand when the public's desire to save grows. If increases in saving occur through the holding of additional private bank liabilities, rather than central‐bank created money, banks could adjust their supply of liabilities so as to keep saving and investment equal and avoid reductions in aggregate demand. Hill's alternatives to market‐driven financial intermediaries also fail to compare fairly the market and political processes.