In the early 20th century, the economic machinery of the U.S. crumbled with the stock market crash of 1929, which initiated the Great Depression—a period of unprecedented economic decline. In these desperate times, new ideas were necessary, and economist John Maynard Keynes provided them.
At a time when conventional wisdom advised governments to retreat during economic downturns, Keynes advocated the opposite: he argued that during a slump, the government should increase its spending. He suggested that the government could boost demand by investing in public works, providing jobs and income, and stimulating further expenditure and investment—a virtuous cycle.
Keynes's theories formed the basis of what is now known as Keynesian economics, a cornerstone of modern economic theory and practice. His insights have shaped fiscal policies worldwide, influencing how governments respond to economic crises, including the stimulus packages during the 2008 financial crisis and the COVID-19 pandemic.
Keynes was not merely an economist; he was a visionary who understood that economics was not just about numbers but also about people and their well-being. His work revolutionized how we consider the government's role in the economy, and his legacy endures every time a government intervenes to stabilize or stimulate economic activity.
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