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John Maynard Keynes

John Maynard Keynes, an English native, professed economic concepts that form the headwaters of economic theory for many outstanding economists who succeeded him and is a testament to the magnitude and influence of his ideas. A youth of prodigious intellect, Keynes attended King’s College to study mathematics, and it was here that his interest in economics began. Keynes started a lectureship on economics that was funded by Alfred Marshall, and after being refused by Cambridge many times, he vowed a ban to build his reputation as an economist. Keynes` expertise was called upon after World War I as an adviser to the British chancellor of the Exchequer to the Treasury of Financial and Economic Questions where his responsibility was to design credit terms between Britain and its allies during the war. After his promotion in 1919 to the Senior Treasury Official, he resigned to write his first book entitled Economic Consequences of Peace, in which he criticized President Woodrow Wilson as being a "blind, deaf Don Quixote" and France`s Georges Clemenceau as a xenophobe with "one illusion — France, and one disillusion — mankind" for their insistence that Germany pay war reparations. In 1936, he published his most important book, A General Theory of Employment, Interest and Money, which revolutionized economic theory by showing how unemployment could occur involuntarily and how governments should engage in deficit spending to make up for the economic slowdowns caused when businesses reduce their investments. In 1934, Keynes paid a visit to President Franklin D. Roosevelt, where he was unsuccessful in persuading the president to engage in deficit spending to bring America out of its economic tailspin. Instead, as the economy recovered during the latter part of Roosevelt`s first term, FDR used the opportunity to reduce spending and bring the budget closer to balance. Even though unemployment was still very high, the 1938 budget reduced expenditures by a sixth compared with 1936 and virtually eliminated the deficit. As Keynesian theory would have predicted, the sharp decline in budget stimulus led to reversal in the economic recovery. It was not until the U.S. entered World War II that Roosevelt, having decided that he had no choice, reversed his long-held position of a balanced budget to one of using deficit spending to kick start the economy. The English economist died on April 21, 1946. His name became attached to economic theories which only half reflected his views. Support for government spending to counter the effect of recessions is now widespread, but his disciplined expectation that during good times, governments would recoup their losses has proved too unpopular in practice.