>What I should have said was that the results of the study reported
>on in the WSJ Rebello article forwarded by Doug were consistent with
>Keynes's liquidity preference theory. The study doesn't, to say the
>least, interpret its results in terms of this theory, so it's not a
>"return to Keynes" in this sense.
>
>The rationality postulate underpinning the view of financial markets
>that does actually dominate conventional economic analysis - the
>assumption of omniscient fully rational expectations - is very
>widespread.
Yup, exactly. What's interesting is that the central bankers knew that markets are deeply psychological and manipulated the markets accordingly. While they may profess theoretical allegiance to neoclassical notions of market rationality, in practice, they're screaming Keynesians.
Doug