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Recommendations for Fiscal Policy in Response to Financial Crisis
The chapter explores suggested policies for addressing the 2008 financial crisis, emphasizing the effectiveness of fiscal expansions to boost demand and tackle inflation. It delves into the debate on the Fed's inflation targeting and the potential impact of fiscal policy on interest rates, drawing comparisons to historical wartime economies and central bank strategies. The discussion also touches on the psychological and historical influences within the FOMC, highlighting the importance of fiscal policy in stabilizing the money supply and providing safe assets in times of crisis.