03-06-2014, 01:18 AM
How does this interpret when looking at the possibility that the money supply itself in 2008 was the issue and not those goods and services which (at least in my ignorance) are considered in the traditional economic models?
A rapid drop in available funds (loss of supply) didn't result in an increase in demand so much as it created a further loss of supply as the credit markets went on lock down. Not until liquidity was restored to the market (which has taken years as banks couldn't deleverage overnight) did demand resume as evidenced by the regrowth of the economy. A pretty clear case of shortage begetting shortage.
Bless the Fed and those that have been in the position to actively support its actions.
A rapid drop in available funds (loss of supply) didn't result in an increase in demand so much as it created a further loss of supply as the credit markets went on lock down. Not until liquidity was restored to the market (which has taken years as banks couldn't deleverage overnight) did demand resume as evidenced by the regrowth of the economy. A pretty clear case of shortage begetting shortage.
Bless the Fed and those that have been in the position to actively support its actions.