"... Richard Koo is wrong to insist that monetary policy can’t do anything in a balance sheet recession."
"Koo’s argument is that interest rates and monetary policy don’t matter because everyone is debt-constrained."
" That can’t be right; if there are debtors, there must also be creditors, and the creditors must be influenced at the margin by interest rates, expected inflation, and all that."
"That said, widespread credit constraints presumably reduce the number of players who can take advantage of lower rates. "
So the IS curve, while still downward-sloping, is probably steeper than normal, So .....There is still a sufficiently low real interest rate that would produce recovery, but it’s a rate that’s hard to achieve"
faith based conviction ??
no reification based deduction
he has a model that assumes there is always"a sufficiently low real interest rate that would produce recovery"
really ???
this is essence means a market economy only needs a central bank with a limitless money mine
at the core of its credit system to stablize it no matter what naughty excesses it gets itself into
conclusion
pk is style a macro tool cyclops
because his model sez so
