Published on June 9, 2010 | by LawNews
Prof. Daniel Greenwood Writes ‘Government Bad/Corporations Good’
In a recession people save, if they can, because they are scared about their own financial prospects and those of their relatives—losing their jobs or their existing savings. Meanwhile, the financial industries, which are supposed to recycle savings into investments, fail to do so, because they see less potential for future profit. At the same time, increased savings means lower demand for current consumption, thus further reducing private profit potential and worsening the recession.