Keynes Thinks Investment Has Become a By-Product of a Gambling Casino So He Wants to Prevent Short-Term Speculation

In a widely known passage of his General Theory, Keynes has drawn from the undoubted dependence of stock market prices upon subjective factors, moods and errors the conclusion that the flow of savings into investments is no longer dictated by long-run expectations of yield, but rather by short-run expectations of stock market gains, particularly in the United States. Thus, he thinks, investment has become the by-product of a gambling casino! Foolish investments were made or reasonable ones omitted depending on whether speculators were pushing up or depressing prices. Keynes recommends as a remedy that the bonds between investor and investment be made as indissoluble as those of marriage, which can be separated only by death or for very important reasons. In other words, Keynes opposes negotiability of investments in securities so as to prevent short-term speculation.

—L. Albert Hahn, Common Sense Economics (New York: Abelard-Schumann, 1956), 207-208.