This has been my thesis all the time. "The neo-Keynesian economist wants to boost demand generally. But if we believe that debt-driven demand is different, demand stimulus will at best be a palliative. Writing down former borrowers’ debt may be slightly more effective in producing the old pattern of demand, but it will probably not restore it to the pre-crisis level. In any case, do we really want the former borrowers to borrow themselves into trouble again?" Thank you, Raghuram Rajan. Yet, I still have a further hypothesis related with the pre-crisis american lifestyle.
Posted on: Wed, 07 Aug 2013 06:27:59 +0000
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