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"Thus lowering interest rates increases investment — it reduces the cost of getting money, which reduces the cost of making stuff, which means more things can m
by perkoff 17y ago
"Thus lowering interest rates increases investment — it reduces the cost of getting money, which reduces the cost of making stuff, which means more things can make a profit."
The problem with this reasoning is that Keynes only considers the demand side for capital. What about the supply side? Will lower interest rates encourage savings?
- aaronsw 17y agoHuh? Lower interest rates are the result of an increased supply of capital -- by the government printing money.
- startingup 17y agoGovernment printing money increases capital? Do you even know what "capital" means? By your definition Zimbabwe has extreme amounts of capital ... that seems to have done them a lot of good.