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The True Lessons of the Recession

The West Can’t Borrow and Spend Its Way to Recovery

Author: Raghuram G. Rajan, University of Chicago
May/June 2012
Foreign Affairs

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Most experts think the global recession was caused by a collapse in demand -- and so, in good Keynesian fashion, they want governments to ramp up spending to compensate. But the West's recent growth was dependent on borrowing. Going even further into debt now won't help; instead, countries need to address the underlying flaws in their economies.

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