Q: As C took a hit after 2007, did I pick up the slack?

A: Under current arrangements financial intermediaries have the discretion to take S and not transform it into capital expenditure.  This discretion must be abolished.

RL 

On Wed, Nov 2, 2011 at 7:52 AM, Robert Leeson <[log in to unmask]> wrote:
> If S increases, C falls (the consumer goods sector shrinks, proportionately). But if all the new S become new capital expenditure the capital goods sector expands (initially - ignoring multiplier effects - by exactly the same $ amount as the consumer goods sector shrimks). Y therefore does not fall. The Paradox of Thrift fails.
-- 
Michael Perelman
Economics Department
California State University
Chico, CA
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