Blog-Reference and Blog-Reference on Sep 11 and Blog-Reference on Sep 23 adapted to context
Keynes formulated the formal core of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)
This elementary syllogism is conceptually defective because Keynes never came to grips with profit (Tómasson et al., 2010, p. 12). As a result (i) all I=S models and the Keynesian multiplier are false (2011), (ii) the Wicksellian interest rate mechanism is false, (iii) the theory of interest is false, (iv) Hicks’s/Krugman’s/Farmer's IS-LM models are false (2014).
The periodic rewarming of the I=S/IS-LM debate of the 1930s is only good for one thing: to demonstrate the abysmal scientific incompetence of both orthodox and heterodox economists. For details see cross-references Refutation of I=S.
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL