Euan F’s Reviews > The General Theory of Employment, Interest, and Money > Status Update

If a tolerable level of employment requires a rate of interest much below the average rates which rolled in the nineteenth century, it is most doubtful whether it can be achieved by merely manipulating the quantity of money.

e_w=1 means that the wage unit in terms of money rise in the same proportion as effective demand;
e_o=0 means that output no longer shows any response to a further increase in effective demand.

Absolute inflation, which ensues on an increase in effective demand in circumstance of full employment.

So long as there is unemployment, employment will change in the same proportion as the quantity of money; and when there is full employment, prices will change in the same proportion as the quantity of money.

For the importance of money essentially flows from its being a link between the present and the future.

We can,therefore, theoretically at least, produce precisely the same effects on the rate of interest by reducing wages, whilst leaving the quantity of money unchanged, that we can produce by increasing the quantity of money while leaving the level of wages unchanged.

a movement by employers to revise money-wage bargains downward will be much more strongly resisted than a gradual and automatic lowering of real wages as a result of rising prices.