Keynes rarely overlooked an opportunity to criticize the classical gold standard. The main point of his criticism changed, however, in parallel with the development of his ideas. The mature Keynes, as in this quotation, gave two main reasons why the gold standard is not a welfare maximizing arrangement. First, countries cannot reduce unemployment by expanding domestic demand. They must compete for exports to acquire gold and increase money. Their gain is at the expense of another country (or other countries) that loses gold and must contract. Second, the classical gold standard prevents a country from independently lowering its interest rate. Keynes often wanted a zero rate of interest, and certainly a permanently lower rate of interest, to increase investment, the capital stock, and per capita income.

The association of Keynes with closed-economy macroeconomics, in which money “does not matter,” is one of the great anomalies in the history of economics.