Economics Has a Surprising Mental Disorder

[Benton D Struckcheon]

4. They ignore Keynes, simply.

Keynes' central insight was simple: in a world of complete uncertainty, investments are made only under the condition that the person who makes that investment has a reasonable expectation of getting his money back on demand (liquidity) and of course, of making a profit.
What disappears in a crisis is that first criteria. That's when maximum uncertainty sets in, and everyone just closes up their wallets and sits on them. The only way to get them to open their wallets again is to stimulate enough demand that liquidity becomes, once again, something the investor can rely on. The private economy then gets moving again.
Keynes correctly described his theories as moderately conservative: it's not like he was Marx or something. But the way the neoclassical folks and the ones who follow them act, you'd think he was.
The worst is Taleb, who thinks Keynes didn't account for a world of complete uncertainty, when that was in fact his starting assumption. If ever there was a case of ideology getting in the way of truth, Taleb is it.