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Is that growth, or does that fall under "eating the seed corn"? I agree the money supply has to expand when the economy expands, but that's not the same thing
by gozur88 10y ago
Is that growth, or does that fall under "eating the seed corn"? I agree the money supply has to expand when the economy expands, but that's not the same thing as printing a bunch of money and spending it during a recession.
- Gibbon1 10y agoIn theory in a properly managed recovery from a recession bad debt is eliminated via loan restructuring and new more productive debt is created to replace it. And income insurance programs[1] are used to support demand. Austerity during a recession works poorly because instead of replacing unproductive debt with new more productive debt, austerity attempts to subsidize the owners of bad debt by taxing demand. [1] Unemployment insurance, welfare, state run retirement, pensions, etc.