In what sense is the bust good for the economy?
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In what sense is the “bust” good for the economy?
Started by Murphy, Sep 09 2005 10:23 PM
1 reply to this topic
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Posted 29 August 2008 - 10:24 AM
It cleans up the malinvestment by reallocating factors to the right areas. Employment wasted in capital production eventually returns to consumer demand goods. Those less efficient producers, who probably would not have emerged in a natural interest rates world, are sent to the scrapyard and their capital, if possible, is bid away.
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