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Politics : View from the Center and Left
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To: Paul Kern who wrote (103918)2/11/2009 6:50:37 PM
From: Dale Baker  Read Replies (2) of 541997
 
The factor many people omit is the sudden drop in demand vs. the economy's productive capacity. Injecting more dollars will do nothing except stimulate idled capacity for a long way, hopefully long before we reach full capacity again and the extra dollars are chasing a more limited pool of goods.

If the Fed can sop up the liquidity on the way back to some kind of equilibrium, the strategy works. I don't see inflation problems for at least several quarters in our current state.
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