tailieunhanh - Capitalism Court of Appeals discusses_11

Tham khảo tài liệu 'capitalism court of appeals discusses_11', khoa học xã hội, kinh tế chính trị phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Conclusion stocks rather than the price of items that dominate the consumer price index. Depressions were thought a thing of the past and Robert Lucas pronounced the end of depression economics and urged macroeconomists to shift their attention to issues of economic growth. Economists were strongly influenced by Milton Friedman s argument that the Great Depression had been the result of the Federal Reserve s shrinking the money supply when prices and output fell in the wake of the stock market crash of October 1929 that had the Fed kept up the money supply the nation would have experienced nothing worse than a recession. Insufficient weight was given to the fact that the Federal Reserve s creation of money is mediated by the banking industry. The Fed in effect licenses the banks to create money by making loans and if they are afraid to lend more precisely if they set stringent criteria for lending because the risk of default is so great and if overindebted people are afraid to borrow lest they have to repay their loans in more valuable dollars the money supply may shrink despite the Fed s efforts causing deflation to accelerate as prices fall and firms and individuals hoard cash. At that point the efforts that the Federal Reserve would have to 327 A Failure of Capitalism exert in order to arrest the deflationary spiral might plant the seeds of a terrible post-depression inflation. And in anticipation of the inflation interest rates might rise rather than fall choking off recovery from the depression. The failure of the economics profession to have grasped the dangers that have now produced the first . depression since the 1930s is excusable. Ideology has played a role in this professional blindness but that is unavoidable because of the difficulty of empirically testing rival theories of depression and the political significance of depressions and responses to them. The fact that finance and macroeconomics have become separate fields with some difficulties of .