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Depending on the circumstances you might get more consumption and then more production, if that society produces anything needed by most people. If you have, broadly, 20% unemployment it will be a long time before you get wage push inflation and that is the mechanism that giving money to other than the rich works. Give it to the rich and they just get richer. They may buy up more assets, but they won't consume much more of anything the average person consumes.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 26th, 2014 at 09:17:09 PM EST
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ARGeezer:
If you have, broadly, 20% unemployment it will be a long time before you get wage push inflation

Isn't that the 'pushing on a piece of string' theory? I.e. it can work, but only after protracted efforts and many 'fails' first.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Sep 27th, 2014 at 01:15:21 AM EST
[ Parent ]
No, pushing on a string is about monetary policy impotence.  The central bank can't induce more borrowing when households and businesses are financially strapped by lowering interest rates (because households and businesses want to do the opposite) -- and, even if households and businesses wanted to borrow, they couldn't, because commercial banks' risk premiums are too high for them to make loans.

ARG's referencing effects from capacity utilization and propensities to consume tied to fiscal injection.

If you inject a bunch of money into the checking accounts of households, they'll spend it.  If unemployment's 20%, factories and stores are probably operating well below full capacity.  The jump in demand will initially result in raising production until unused capacity is mopped up.

You'll see some inflation in some regions where there's not much unused capacity (say, North Dakota).  In others, you'll see a big boom in growth (say, Nevada).

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Sep 27th, 2014 at 08:53:42 AM EST
[ Parent ]
Sure. But print say 10 000 euros per capita and hand it out on a per capita basis, and you'll see a lot of consumption, and inflation. Which is just what the doctor ordered.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Sep 27th, 2014 at 05:50:25 PM EST
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Of course, it might be argued that this is more like fiscal than monetary policy...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Sep 27th, 2014 at 05:51:03 PM EST
[ Parent ]
Actually, three trillion euros might be just the stimulus the Euro Zone needs. However, I wouldn't deploy it quite like that. Perhaps one trillion on renewable energy and distribution infrastructure, another on efficiency improvements and the last on a job guarantee for those still unemployed. And it probably should be spread out over three years. After all, the USA had an $800 billion stimulus which helped, but many argue that it was only half the size needed.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Sep 27th, 2014 at 08:12:39 PM EST
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