Forecasting Mania Is an Integral Part of “Functional Finance,” the “Multiplier Effect” and the “Acceleration Principle”

The forecasting mania of our time is a natural concomitant of what is called Keynesian economics. It constitutes an integral part of the world of “functional' finance,” of the “multiplier effect” of the “acceleration principle” and similar concepts. If one really believes, as the “inventors” of functional finance do, that a depression can be prevented and a boom prolonged ad libitum [as much or as often as necessary or desired] by government deficit spending, if one fails to see that the elimination of the maladjustments in the price-cost relationship created during the previous boom are necessary conditions of revival, then indeed the economic future appears no longer too uncertain. And if one really believes in the working of the multiplier and the acceleration principle, then the more remote future also appears predictable. For according to the multiplier theory a given amount of spending on investment leads in time to an immediately ascertainable stable amount of spending on consumption; whereas a given amount of spending on consumption leads in time to an immediately ascertainable amount of spending on investment.

—L. Albert Hahn, “Predicting the Unpredictable,” The Freeman: A Fortnightly for Individualists 3, no. 1 (October 6, 1952): 23.