Re: Does debt matter

[larson@xxxxxxxxxxx (S R Larsson)]

Basil Moore:
>>         The Post Keynesian position is that modern capitalist econopmies are
>> demand-constrained rather than supply-constrained. Inflation is cost driven,
>> and output is demand driven. The AS curve is horizontal, and the AD curve is
>> vertical.
>
Harry Veeder:
>I think this was basically correct for 30 years following WWII but since the
>end of the '70's a changing culture of employment has made supply constraints
>relevant again.
<

S R Larsson:
What does this "changing culture of employment" consist of? An annihilation
of job security, which in turn broke up old patterns of long-term saving,
long-term credit reliability among households and made millions of people
insecure about their future private economy. Demand slided down and was
caught by a ratchet stuck out from the banking sector - new forms of credit
were invented to prevent a large-scale collapse of the credit system as
fewer borrowed and more people stashed cash for future use.

As I've pointed out before, changes in "culture of employment" that bring
about temporary employment contracts are nothing but negative to an
economy. Lack of predictability is always a burden to an economy. Nowhere
have economists been able to prove that mass unemployment is due to
supply-side factors.

-----
Sven Robert Larsson
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