ABSTRACT
The difference in emphasis leads to opposite conclusions on public policy. Harold G. Moulton’s policy looks to gradual price reductions over a period of time. Irving Fisher and John Maynard Keynes look to day-by-day emergencies that require even reversals of policy in preventing at one time a general fall of prices, and, at another time, a general rise of prices. The extensive and important investigations made by the Brookings Institution lead Moulton to diverge from another simplified classical assumption, that of individual action, and to introduce the complexities of collective action controlling more or less the mobility and substitutions of individual action. Moulton’s injection of “the credit structure” between producers and consumers reveals a discrepancy concealed in the theory of savings and consumption. For the isolated individual, who is both producer and consumer, savings are increased only by reducing consumption.
