$ under the bed

Modern economies have a design flaw. If the economy begins to tank people become afraid to invest, so they hide their money under the bed. Money under the bed doesn’t get invested. The productive capacity of the economy goes under utilized – labor and capital equipment is under employed. That helps it sink further into the tank. Repeat and you have a major problem on your hands.

Various prescriptions for this malady exist. For example, the Bush administration likes to use happy talk. A less faithbased approach is for the government to pump money into the economy. Buy stuff! This can work nicely, prices are low. If they shop wisely, buying useful infrastructure it’s all for the best.

The Japanese have been in long recession. They have bought a lot of concrete. Apparently they bought a huge underground water catch basin. It’s big!

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