vanyali

The Great Experiment

So, in response to a perceived risk of deflation in 2001 the government drastically increased the money supply (lowered interest rates), leading to a gigantic asset bubble, which eventually popped.

Now, the popping of the bubble has lead to a perceived risk of deflation which the government should respond to by drastically increasing the money supply . . . . . . and then spending all the new money?

Was the problem in 2001 really that the government didn't spend all the new money it created itself? Something about that doesn't really click with me.