An Underconsumption Crisis
The characteristics of an underconsumption crisis are a recessionary climate, unused capacity, excessive debt and pessimistic expectations that block further accumulation. An underconsumption model has the hallmarks of a weakened negotiating position of labour, wages that have not kept pace with productivity increases, weak demand caused primarily by a lack of reinvestment and consumers preferring to save rather than spend, that is, the situation in the West today. As Keynes explained, the only way to escape from such a downturn is to increase demand, and it falls upon today’s countries with positive trade balances, like Germany and Japan, to provide that stimulus for the world economy.
KeywordsMonetary Policy Full Employment Gold Coin Unused Capacity Export Surplus
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