by Summary:
To reduce private debt and stabilize the economy is a common belief. Many think that simply cutting government spending will solve our economic woes. This is wrong. When governments cut spending, they inadvertently reduce the money supply. This creates a vicious cycle. Less money means less spending. Less spending leads to lower demand. Lower demand results in businesses cutting back, leading to layoffs. The economy shrinks, and private debt becomes more burdensome. Instead, we should implement government policies to create money and reduce household debt. When the government spends, it injects money into the economy. This increases the net financial worth of households. It’s like watering a garden. Without water, plants wilt. With water, they thrive.
Topics:
Steve Keen considers the following as important:
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To reduce private debt and stabilize the economy is a common belief. Many think that simply cutting government spending will solve our economic woes. This is wrong. When governments cut spending, they inadvertently reduce the money supply. This creates a vicious cycle. Less money means less spending. Less spending leads to lower demand. Lower demand results in businesses cutting back, leading to layoffs. The economy shrinks, and private debt becomes more burdensome. Instead, we should implement government policies to create money and reduce household debt. When the government spends, it injects money into the economy. This increases the net financial worth of households. It’s like watering a garden. Without water, plants wilt. With water, they thrive.
Topics:
Steve Keen considers the following as important:
This could be interesting, too:
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| To reduce private debt and stabilize the economy is a common belief. Many think that simply cutting government spending will solve our economic woes. This is wrong. When governments cut spending, they inadvertently reduce the money supply. This creates a vicious cycle. Less money means less spending. Less spending leads to lower demand. Lower demand results in businesses cutting back, leading to layoffs. The economy shrinks, and private debt becomes more burdensome. Instead, we should implement government policies to create money and reduce household debt. When the government spends, it injects money into the economy. This increases the net financial worth of households. It’s like watering a garden. Without water, plants wilt. With water, they thrive. Government spending acts as that water. Next, democratizing share ownership is crucial. Many believe that wealth should remain concentrated. This is a flawed belief. Wealth concentration leads to power concentration. When a few hold all the cards, the game is rigged. Democratizing ownership spreads the wealth. It allows more people to benefit from economic growth. This is akin to sharing a pie. If only a few get slices, the pie runs out quickly. But if everyone gets a slice, the pie can grow. Finally, returning to low private debt levels seen during the golden age of American capitalism is essential. Some argue that high debt levels are normal. This is misguided. High debt levels lead to instability. They create a ticking time bomb. When the debt explodes, it devastates lives. Lower debt levels mean more resilience. It’s like a sturdy bridge. A sturdy bridge can withstand storms. A fragile one collapses under pressure. We need to build a sturdy economy. This requires understanding the real dynamics of debt, spending, and ownership. Only then can we stabilize our economy and secure a better future. |