| Abstract: | The 1967 sterling devaluation opened the final act of the Keynesian epoch. The assurance ‘that the pound here in Britain, in your pocket or purse or in your bank’ had not been devalued, rests upon a ‘fixed price’ assumption invoked by John Maynard Keynes for the 1930s. It carried the implication that a currency revaluation is the only price change that is relevant to international competitiveness. That is nonsense. Devaluation succeeds in readjusting international payments only if it reduces the value of the pound in our pocket, purse or bank. |
