Tuesday, August 29, 2006

The destabilising stabiliser

Minsky:

“The combined effects of big government as a demander of goods and services, as a generator – through its deficits – of business profits and as a provider to financial markets of high-grade default-free liabilities when there is a reversion from private debt means that big government is a three way stabilizer in our economy and that the very process of stabilizing the economy sets the stage for a subsequent bout of accelerating inflation.”

Inflation, Recession and Economic Policy, 1982 - page 56

Quoted by Noland.

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