Money and Banking essay

 Read Chapters 13-16 in Cassidy's book and Jim Crotty's paper.

Keynes wrote in The General Theory: “If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a textile factory … amounts to little and sometimes to nothing” Keynes was not talking about periods of economic turmoil or crisis, when it might be expected that accurate information would be hard to come by.   In his view, a state of “near ignorance” was the normal state of affairs.

Please discuss Keynes’ concept of “uncertain” knowledge and what it may imply for our ability to (a) measure risk and to (b) make “rational” investment decisions, both in financial assets as a portfolio manager as well as in “real” businesses by a CEO and a corporate management team.  

Given our inability to “do the math” when making decisions about the future with an uncertain outcome, what do people usually do?