Stabilizing nominal GDP cannot eliminate real recessions because genuine malinvestments must be written down and real income must fall as resources are temporarily unemployed until they find sustainable uses; but it can prevent the recession from being more punishing than necessary by avoiding making debts hard to repay due to shrinking nominal income.

causalpending

Speaker

Larry White

Evidence Quote

you can't eliminate recessions that way because there were real malinvestments when those are written down real income has to decline

Source

Larry White on Hayek and Money 02/01/2010EconTalk
Created: 6/17/2026, 10:31:20 AM

My Notes

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