Keynes's theory of liquidity preference and his debt management and monetary policies

This paper seeks to bolster the view that Keynes was a monetaryeconomist concerned primarily with monetary and not fiscal policy.His most fundamental policy conclusion for national economieswas that the authorities could control the long-term rate ofinterest and should do so to promote investment, growth andemployment. Keynes's theory of liquidity preference is presentedas a theory of money as a store of value that leads to thisfundamental policy conclusion. The theory is then applied toexplain the debt management, monetary and international financialpolicies that were adopted in World War II.