Ric, when you say that: > If a nation does have a high savings rate then certain benefits are >shifted to future generations. are you speaking of the neoclasical view? The first thing that pops to mind is the famous first few pages of chapter 16 of the _General Theory_: "An act of individual saving means- so to speak- a decision not to have dinner today. But it does _not_ necessitate a decision to have dinner or to buy a pair of boots a week hence or a year hence or to consume any specified thing at any specified date. Thus it depresses the business of preparing to-day's dinner without stimulating the business of making ready for some future act of consumption. It is not a substitution of future consumption-demand for present consumption-demand, -it is a net dimunition of such demand. Moreover, the expectation of future consumption is so largely based on present consumption that a reduction in the latter is likely to depress the former, with the result that the act of saving...may reduce present invstment-demand as well as present consumption-demand...In any case...an individual decision to save does not, in actual fact, involve the placing of any specific forward order for consumption, but merely the cancellation of a present order." (1964[1936]: 210-11). There's more good stuff there, with words like 'absurd', 'specious' and 'fallacy' used to describe the idea that "current investment is promoted by individual saving to the same extent as present consumption is diminished", but my fingertips are starting to hurt. By the way, since this passage is squarely in Book IV, we may have to reconsider using the respective lengths of Books III and IV in determining the relative importance of consumption and investment for Keynes. :) I agree that investment is the independent variable, it's "where the action is" in Keynes, and Keynes's ideas on investment and money and uncertainty of expectations have been ignored and diluted and misrepresented and misunderstood in the mainstream and textbook presentations, but consumption is still important for Keynes's theory. Keynes's consumption theory plays a role in the principle of effective demand, the multiplier concept, his critique of the neoclassical theory of savings, etc. Stability of consumption patterns (as opposed to volatility and unreliability of investment) should not be taken to mean unimportant. Isn't consumption theory integral to the notion that investment determines savings through changes in the level of income, as opposed to savings determining investment through variations in the rate of interest? ___________________________________ Mathew Forstater Department of Economics Gettysburg College Gettysburg, PA 17325 tel: (717) 337-6668 fax: (717) 337-6251 e-mail: [log in to unmask]