Its the reason for the business cycle you simple minded liberal. There is a consequence to everything, holding interest rates lower than market equilibrium for ridiculous periods of time is going to have consequences. The consequence is overinvestment, ie the recent housing market collapse. Restricting savings to promote investment creates an imbalance which causes fluctuations in the economy. If you want steady growth you have to let the free market determine the interest rates.
Lets be more like Japan! Interest rates have to stay at 0% forever or the economy will dive into a depression? Fuck it! Print print print!
The delusional liberal arts student who studied 1 semester of kenyes and thinks by saying "aggregate demand will boost the economy" makes him smart. So how much more stimulus do we need to create this "aggregate demand"? Im pretty sure we're still at 8.2% unemployment with a labor force shrinking. Do we need another 700bil? 2tril? How much more money do we need to print to create this aggregate demand? So, according to you, printing more money will increase consumer confidence?
"Obama’s economic team, Paul Krugman, and other aggregate-demand elves have spent the last three years on the aggregate-demand vs. unemployment problem, heedless of the collateral damage their theories do to the economy. Hayek warned that efforts to goose aggregate demand cause “a very extensive misallocation of resources which is likely to make later large-scale unemployment inevitable.” Subsidies from Washington steer workers into phony jobs"
Last edited by Johnny Retro; 06-20-2012 at 10:54 PM.
"But one thing gives hope – the visible swing in public opinion...In that spectacular disaster the working class, the middle class and even a section of the business community could see the utter rottenness of private capitalism." ~George Orwell