David Beckworth serves up another very good blog post and directs us to this graph of nominal gdp; it seems aggregate demand has been recovering steadily:
In 1937 real government purchases recoiled 4.2% and the economy tanked. In 2012 real government purchases were 4.8% below the 2010 level and the recovery is slow!
Surely something is going on that´s making comparable ‘fiscal austerity’ so much less damning in 2012 than in 1937.
And that ‘something’ is monetary policy.
Here are further remarks from Scott.