IMF Great Depression Warning
The Australian/Wall Street Journal/MarktetWatch.com
October 19, 2011
'Severe risks' in culture of thrift: IMF warning
The International Monetary Fund has warned that the forces that caused the Great Depression in the 1930s are again at work, as households, businesses and governments all cut back their spending.
...In issuing its Great Depression warning, the IMF referred to the work of economist John Maynard Keynes, who showed that when everyone tried to lift their savings simultaneously, the total savings in the economy fell because there was not enough demand for goods and services.
"The overarching risk is of a global paradox of thrift as households, firms and governments around the world reduce demand," the IMF said.
"Downside risks have increased and are severe." ...