Re:The next recession
by FabHK on Thursday October 11, 2018 @01:05PM
(#18195167)
It's not really such a dire ("it's fucked") situation, or desperate prescription.
The (Keynesian) idea is that close to the zero rate boundary, you have a "multiplier" > 1, so that fiscal stimulus leads to even larger GDP growth (thus, it partially finances itself). Furthermore, this works best when people spend, not save said stimulus, and it is uncontroversial that poor (ie most) people have a higher propensity to spend than the super rich (which are main beneficiary of QE).
So, it should be an effective (and relatively orthodox, unless you consider standard Keynes totally off-limit) measure.
The (Keynesian) idea is that close to the zero rate boundary, you have a "multiplier" > 1, so that fiscal stimulus leads to even larger GDP growth (thus, it partially finances itself). Furthermore, this works best when people spend, not save said stimulus, and it is uncontroversial that poor (ie most) people have a higher propensity to spend than the super rich (which are main beneficiary of QE).
So, it should be an effective (and relatively orthodox, unless you consider standard Keynes totally off-limit) measure.
EDIT for clarity.