Monetary pumping and idle resources

Source: Cobden Centre
by Dr. Frank Shostak

“Resources that are utilized to promote economic prosperity in normal times become underutilized during recessions. Some experts are of the view that what is required are policies, which will increase the availability of credit to make greater use of underutilized resources. … As long as the pool of wealth is expanding, easy monetary policy is likely to appear to ‘work.’ Once, however, the pool becomes stagnant or starts declining the ‘music stops’ and no amount of central bank monetary pumping is going to ‘work.’ On the contrary, the more aggressive the central bank’s stance is in attempting to revive the economy the worse things are likely to get.” (11/10/21)