May 8, 2012

We Can't Borrow & Spend to Recovery

Raghuram Rajan, Foreign Affairs

AP Photo

According to the conventional interpretation of the global economic recession, growth has ground to a halt in the West because demand has collapsed, a casualty of the massive amount of debt accumulated before the crisis. Households and countries are not spending because they can't borrow the funds to do so, and the best way to revive growth, the argument goes, is to find ways to get the money flowing again. Governments that still can should run up even larger deficits, and central banks should push interest rates even lower to encourage thrifty households to buy rather than save. Leaders should worry about the accumulated debt later, once their economies have picked up again.

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Related Topics: economy


May 4, 2012
April's Jobs: Americans Aren't Working
Felix Salmon, Reuters

There’s a lot going on in this month’s jobs report. The headline number of jobs created — 115,000 — is miserable: it’s basically just enough to keep up with population growth. That’s the number... more ››

May 4, 2012
Budget Cuts Are Behind Our Stalled Recovery
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We'll know more on Friday when the jobs report is announced, but Thursday’s report on America's massive service sector "“ which make up about 90 percent of the economy "“ is sobering to say the least. more ››

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