But Keynesianism involved continued fiscal expansion, with no offsetting monetary contraction.

Forecasters assumed that monetary expansion would provide an effective antidote to fiscal contraction.

Otherwise, Treasury bond yields would be far higher, thwarting monetary expansion by the Fed.

When the crash came in 2008, massive fiscal and monetary expansion prevented US consumption from collapsing.

Germany is, of course, no advocate of an Anglo Saxon growth model that requires monetary expansion and inflation.

Rules that impede business start ups may be an even more important obstacle to making monetary expansion effective.

Monetary expansion generally makes it easier to borrow, and lowers the costs of doing so, throughout the economy.

The government sought to cover this deficit through monetary expansion, which led to a dramatic increase in inflation.

Once a country eliminated convertibility into gold, it was free to pursue monetary expansion, and deflation tended to end.

The US economy has not responded to the Fed s monetary expansion, because America s biggest problems are not liquidity problems.

A majority of the Fed s governors believes that aggressive monetary expansion has reached, if not exceeded, the bounds of prudence.

The quantity of liquidity in the world economy is surprising, and monetary expansion by central banks does not explain it completely.

But, following monetary easing and fiscal expansion, it is Abenomics third arrow that will prove most important and most politically challenging.

State action and monetary expansion as a means of buying off discontent were discredited, as was the West European welfare state.

Some investors, at least, remember that rising inflation typically follows monetary expansion, and they fear that this time will be no different.

Some of the late 1970 s correction did follow from renewed intense US pressure for fiscal and monetary expansion, but that expansion caused inflationary pressure, which the Japanese and Germans then predictably blamed on the US.

Unless the Fed successfully implements an exit strategy from monetary expansion, which is doubtful, China will not be able to recover its losses.

If it pushes too hard on continued monetary expansion, it won t prevent a bust but instead could create stagflation inflation and economic contraction.

So long as this trend continues, only high and continuing doses of fiscal and monetary expansion will be able to sustain domestic demand.

Anticipation of aggressive monetary expansion has sharply weakened the yen, which has fallen by almost 20 against the dollar in just over four months.

The second paradox is that monetary expansion may be largely ineffective in the country that undertakes it, but can generate large negative externalities on others.

Consider first the goal of reversing the monetary expansion, which is necessary to avoid a surge of inflation when aggregate demand begins to pick up.

The effectiveness of monetary expansion could be enhanced in advanced countries by reducing the leakages generated by the carry trade and other short term capital outflows.

Declining economic growth strengthens the temptation to loosen monetary policy. But in today s deflationary environment, typical monetary expansion alone can do little to help the real economy, because the money either remains idle or fuels asset bubbles and capital outflows.

Of course, these fears are accompanied by the hope that structural reforms and monetary expansion work in harmony, boosting employment and output without raising inflation by much.

Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.

European Expansion or Putin Expansion?

Monetary expansion generally makes it easier to borrow, and lowers the costs of doing so, throughout the economy. It also tends to weaken the currency and increase inflation.

But continued growth increases demand for oil, sending prices even higher. The alternative to monetary and fiscal expansion is recession, at which point oil prices would stop rising.

The Government is consulting with UNMIK as it works to heed advice from the International Monetary Fund to reduce the budget ceiling to avoid unsustainable expansion, particularly in recurrent spending.

The ECB governing council has already agreed, in principle, to use the first of these policy tools. But monetary expansion alone will be inadequate to lift the eurozone out of stagnation.

Regrettably, throughout this process of recovery, expansion and transformation, we did not have the support of the International Monetary Fund, which had provided support until only weeks before the convertibility regime.

But the consensus in Beijing was that the G 20 should adopt a modest proposal this year a limited expansion of the International Monetary Fund s current system of Special Drawing Rights (SDRs).

As many economists, notably Jeffrey Frankel, have shown, prices on these markets are established by an auction like process as a result, commodity markets transmit the effects of monetary expansion particularly quickly.

Its current account deficit remains large, and monetary policy has been confusing, as the objective of boosting competitiveness and growth clashes with the need to control inflation and avoid excessive credit expansion.

But the unprecedented speed and scale of China s monetary expansion remain a concern, given that it could still trigger high inflation and lead to asset price bubbles, debt growth, and capital outflows.

So far during the financial crisis and ensuing recession, the US has been incapable of kick starting credit growth, the major transmission mechanism by which monetary expansion feeds through to domestic economic activity.

The resulting expansion in emerging markets monetary base has led to much higher inflation in these countries than in the US, and to global commodity price bubbles, particularly for oil and staple foods.

They will promise to reverse the explosive monetary and fiscal expansion of the past two years, to do it neither too soon nor too late, and to do it in a coordinated way.

The resulting monetary expansion in the second half of the 1980 s fueled Japan s massive asset price bubble, the collapse of which seemed to lead directly to the country s lost decade of stagnation.

This has fueled rising demand for currency, leading to the expansion of the monetary base, with the money multiplier that is, the effect on lending by commercial banks boosting the money supply further.

Mission expansion

Mission expansion

But, in the end, there are only three ways to secure additional financing for development aid or debt relief higher taxes, increased indebtedness (that is, higher taxes for future generations), and or monetary expansion.

Increase expansion level