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The takeaway from six years of economic troubles? Keynes was right.
Thus the six years since 2008 have provided strong empirical support for the supposedly outmoded Keynesian view that government borrowing is more powerful than monetary policy in stimulating severely depressed economies and pulling them out of recession. In a sense, it is odd that the power of fiscal policy has come as a surprise - or that it continues to be categorically denied by the German government and the U.S. Tea Party. The underlying reason why fiscal policy is so important in recessions, and has now come to dominate over monetary policy, is a matter of simple arithmetic that should not be open to debate.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 31st, 2014 at 09:14:45 AM EST

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