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A few new good businesses still have good solvency even with the downturn perspectives, a few families out there getting a promotion job. But on a massive scale, businesses have poor perspectives (for survival under debt and recession), families are loosing their jobs and homes. The debt to the GDP level is already highest ever. Banks wouldn't give out 10 trillion in loan even if they wished. Or eventually that would be another bad trillions in loans.

What is remarkable about economic theories is not only that they assume generally idealistic roles of money in the "business cycle", but that they keep mum about significance of debt. Apart from Minsky's Financial Instability Hypothesis, debt problems are never central in Keynesian or monetarist theories.

by das monde on Thu Nov 19th, 2009 at 08:06:31 PM EST
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