The Keynesian prescription for an economic downturn is for government to increase spending to improve so-called aggregate demand. In reality, this is a recipe for worsening the recession.
How can a bank “create money out of thin air”? We must enter the magical kingdom of “fractional-reserve banking,” where deposits are turned into loans, loans are turned into money, and so on, to find out.
The usual suspects such as Robert Reich claim that corporate profits are causing inflation. Actually, increases in corporate profits are tied to increases in inflation.
As the Fed increases interest rates to reverse the inflation it has caused, firms that depended on easy money will face the bankruptcy judge. Stay tuned; there's more to come.
