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Recent Posts

Deflation the Biggest Risk of the Economic Crisis? – Janet Yellen

Complete video at: fora.tv Dr. Janet Yellen, President of the Federal Reserve Bank of San Francisco, argues the most likely outcome of the recession is deflation, not inflation. She explains that decreased spending and lowered prices could “turn into outright deflation” if left unchecked. —– Amid the deepest recession of the postwar era, the Federal Reserve faces one of the gravest challenges of its 96-year [...]

New Economic Perspectives: Another Great Depression?

The implementation of New Deal policies created automatic stabilizers which work by putting a floor under aggregate demand, preventing a deflationary spiral, but they also put ceilings in place, as rapid economic growth translates into rising tax revenues which destroy income and temper the expansion. Nowadays, the size of the … It is now important to introduce how the level of investment is determined according to Minsky's framework. Firms invest if the demand … [...]

New Economic Perspectives: A note on Automatic Stabilizers

As noted above, to meet the private sector rising saving desire the government should run bigger deficits to prevent a deflationary spiral. Source: Jan Hatzius, Goldman Sachs. As Minsky emphasized, the problem, during the [...]