S E50: A Conversation with Larry Summers: The Influence of Economic Ideas and the Dangers of Secular Stagnation
Think Like An Economist
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The Supply and Demand Diagrams of the Market for Funds
There are two supply and demand diagrams that are essential for understanding secular stagnation. When there's less demand relative to the economies potential, there's a tendency to low inflation or even to declining inflation. So start with the market for funds that help to understand what happens with respect to the testrate. And then if you look at what’s happening to the quantity of investment in demand, then you look atwhat is happening to the inflation process.
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