Some claim "the rich" will be fine—or even better off—after the COVID panic destroys the economy for most of us. But there's a problem: the wealthy depend heavily on an economy fueled by the production and consumption of all workers and entrepreneurs.
Thanks to past interventions, the economy is now rife with malinvestments and prices that don't reflect real demand. The solution is to allow deflation and other types of painful readjustment. Otherwise true growth will elude us.
Reswitching indicates that the average production period is not necessarily a decreasing function of the interest rate. Granot's generic model of the structure of production shows behavior resembling reswitching.
Thanks to past interventions, the economy is now rife with malinvestments and prices that don't reflect real demand. The solution is to allow deflation and other types of painful readjustment. Otherwise true growth will elude us.
Central banks have decided that one of their main missions is to prevent deflation. But this only ends up causing the malinvestments that lead to economic busts.
Prices and purchasing power are determined by how individual consumers value goods and services. The "velocity of money" won't help us understand prices or the money supply.
Prices and purchasing power are determined by how individual consumers value goods and services. The "velocity of money" won't help us understand prices or the money supply.
No matter what levers are pulled by the fiscal and monetary authorities, stones will not be turned into bread.
Although the money supply has greatly increased, accompanying growth in production has it possible to keep the current system of immense debt increase going for a long time.
