Must-Read: Stan Fischer: Reflections on Macroeconomics Then and Now: “In 1961, at the end of my school years, on the advice of a friend…

…I read Keynes’s General Theory for the first time. Did I understand it? Certainly not. Was I captivated by it? Certainly, though ‘captured’ is a more appropriate word than ‘captivated.’ Does it remain relevant? Certainly. Just a week ago I took it off the bookshelf to read parts of chapter 23, ‘Notes on Mercantilism, the Usury Laws, Stamped Money and Theories of Under-Consumption.’ Today that chapter would be headed ‘Protectionism, the Zero Lower Bound, and Secular Stagnation,’ with the importance of usury laws having diminished since 1936.

There is an old joke about our field…. ‘But this is exactly the same as the exam I wrote over 50 years ago.’ ‘Ah yes,’ says the professor. ‘It is the same, but all the answers are different.’ Is that really the case? Not really…. The basic framework we learned a half-century ago remains extremely useful. But also yes: Some of the answers are different because… the problems they deal with were not evident fifty years ago…. Learn as much as you can, for most of it will come in useful at some stage of your career; but never forget that identifying what is happening in the economy is essential to your ability to do your job, and for that you need to keep your eyes, your ears, and your mind open, and with regard to your mouth–to use it with caution.