‘no one saw this coming’ : understanding financial crises through accounting models

[Skip to the end] Objections to deficit spending- 1. Deficits now mean higher taxes later. Response — Taxes function to regulate aggregate demand, not raise revenue per se. Taxes will go up ‘later’ only if aggregate demand is ‘too high’ later which means unemployment becomes ‘too low.’ that is exactly the point of deficits today- to bring down unemployment [...]