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Crisis lessons from Irving Fisher: Fix the debt-deflation disease, not its symptoms | vox - Research-based policy analysis and commentary from leading economists
This column rehabilitates Irving Fisher’s debt-deflation theory to explain the current crisis. It suggests that fiscal stimulus will do little to prevent the crisis from becoming a protracted slump because the problem lies in finance. A cure will require reversing deflation and restarting the credit system.
“…in the great booms and depressions, each of the above named factors (over production, underconsumption, over capacity, price dislocation, over confidence, over investment, over saving etc.) has played a subordinate role as compared with two dominant factors, namely, over indebtedness to start with and deflation following soon after;… where any of the other factors do become conspicuous, they are often merely effects or symptoms of these two.” (Irving Fisher, 1933, p. 341)
deflation  debt  macroeconomics  2010  2011  IrvingFisher  consumption  greatrecession  greatdepression  capacity  public  private  economics  fiscal  stimulus  book 
february 2011 by asterisk2a

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