Thursday, August 1, 2013

The Great Depression Explained And How It Applies to Current Economic Problems

Bruce Bartlett does a nice job of explaining how a contraction of the money supply contributed to the Great Depression.  He also explains some of destabilizing effects of price deflation on the economy.  Moreover, he explains why fiscal policy becomes the best mechanism for increasing employment when monetary policies become less effective when short term rates have been reduced to zero bound by the central bank.  This is the first of three articles that I have posted that shed some light on our slow recovery from the Great Recession. 

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