Solution to the Puzzle

 

 

Manage aggregate demand!

- Keynes came to Washington,
- met with President Roosevelt, and
- proposed the right amounts of government spending necessary to overcome the American insufficiency of demand.

 

John Maynard Keynes    
The turnaround in the American Great Depression by way of increased federal spending gave politicians a reason to measure and augment total spending when necessary to achieve and sustain full employment.

 

So disturbed was Congress by the prospect of 3.5 million soldiers returning from World War II to the American workforce ...
 (and possibly to a recession without jobs) ... that
Congress passed a Full Employment Act of 1946. 

The Act created:
(1)  a Council of Economic Advisors;
(2) an annual state of the nation presidential report; and
(3) a mandate empowering government to seek maximum employment and sustained purchasing power.

Reversing a tradition of laissez faire, the Age of Keynes set in motion decades of governmental management of macroeconomic affairs.

 

 

  

Love for Econ Springs Eternal !