our Little Depression was caused mainly by overly tight money in an environment of over-indebtedness and financial fragility, and was then allowed to deepen and become entrenched by monetary authorities unwilling to commit themselves to a monetary expansion aimed at raising prices enough to make business expansion profitable.Uneasy Money
Central bankers operate with a six month time constant, well announced and well advertised. If the economy changes faster than that, then we need something other than a central banker. Unfortunately, the energy shortages of 2008 asserted itself much faster than the Fed could react.
The fear that business feels about expansion is not psychological. Their input prices have consistently risen faster than their sales prices since the recession. Look at the ratio of CPI/PPI. When that begins to rise, business will invest.
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