Investment banks manage to go bankrupt through their investment-banking activities, commercial banks manage to go bankrupt through their commercial-banking activities.

The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately in the absence of countervailing monetary policy action to further upward pressure on inflation.

How much would you pay to avoid a second Depression?

The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.

The more important reason is that the research itself provides an important long-run perspective on the issues that we face on a day-to-day basis.

I am very proud of my nerd-dom.

The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place.