[Excerpts from Keynes's] letter to the Governor of the Bank of England on May 22, 1930

출처: JMK, Vol. 20, pp. 350-356

자료: http://www.xtimeline.com/evt/view.aspx?id=307748

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In a letter to Governor of the Bank of England, Montagu Norman, Keynes says

“ If our total investment (home plus foreign) is less than the amount of our current savings (i.e. that part of their incomes which individuals do not spend on consumption), thenㅡin my opinionㅡit is absolutely certain that business losses and unemployment must ensue. ”

“ My fundamental diagnosis of the situation is, therefore, this. Given our present gold costs of production relatively to the foreign situation, a rate of interest, which is high enough to keep our foreing lending within bounds, is too high to permit of the absorption in home investment of the surplus of our savings over our foreign investment as thus limited.  Accordingly savings exceed total investment. Hence inevitably and mathematically business losses and unemployment. ”

“ There are only three possible methods (and there is no reason why we should not employ the first two of them simultaneously) of restoring equilibrium:ㅡ(a) to increase foreign investment (i) by increasing our exports as a result of decreasing our gold-costs of production;ㅡthis is where your rationalisation schemes come in. (ii) by decreasing our imports either by the same means as (i) or by tariffs:ㅡthis is where safeguarding proposals come in. (iii) by making increased loans to borrowers who are likely to expend them in part in buying more exports from us;ㅡI return to this later, but this expedient is obviously limited by the pace at which other creditor countries are lending. ”

“ I believe that the root of the trouble, both here and, more recently, throughout the world, is to be found in the long-term rate of interest being held far above its equilibrium level. (At the equilibrium level the demand for savings is equal to the supply and there is no unemployment.) This is the case for a variety of reasonsㅡresulting partly from the War, partly from the struggle for gold ensuing on the general return to gold and aggravated by the behaviour of certain banks, and partly, at this moment, from there being a long line of distress-borrowers waiting a queue. ”

“ On the monetary and banking side, thereforeㅡas distinct from the technical, rationalising problemㅡthe task is to produce credit conditions which will bring down the long-term rate of interest and at the same time stimulate investing enterprise. If the governments, banks, and issue houses of all the creditor countries in the world were to work together in this direction, it would present no great difficulty. For if everyone moves in step, no-one will lose gold. ”

“ My recipe would be to increase the supply of Treasury bills, so as to bring bill up nearly 3 per cent, and at the same time buy long-dated securities, thus putting the gilt-edged market good and helping new issues. ”