Credit having been obtained by a bonds issue, the Government necessarily returns the interest to the investors on an annual basis, until the bonds are redeemed. Although the prime-rate of this interest is now reduced (see below), the coverage of this deficit raises the tax burden unless the money is loaned to the banks with the return of interest. The national budget must be balanced and the Treasury should explain where and how its new income is being spent. Money that is used for providing the new jobs cannot also be taken for servicing the loan.
Governmental short-sighted policies of creating new jobs do not consider the corresponding loss of work places elsewhere. Once Governments cease taking this myopic attitude, they will find that the overall effect is no different than without this policy being applied. The only way that jobs can really be created is by making available greater opportunities to produce and to earn (see below).
Even with the deliberate introduction of inflation and Governmental spending, the overall result is similar. In a remedial manner inflation weakens the monetary strength of certain parts of the system in order to strengthen others. After summing the total influence on both credits and savings, the true effect can be seen, although it now includes some time-dependency. The early effective gains by the creditors equal the later losses by the savers. Thus inflation does not help the whole system to regain strength over the long-term, although it defers some of the adverse effects of the slump to a time when recovery has hopefully begun. And it achieves this by a socially unjust redistribution of the purchasing-power.
A more-remote observer of the macro-economy at large would find that it has a natural means of autonomous control, where the real factor of influence in its operation is the value of goods being produced and traded and not the face-value of the money itself. Money is a medium of exchange that represents value, whilst intrinsically having none. After credit is given, it must subsequently be returned. With deliberate inflation, the purchasing-power of the cheapening money being circulated first rises and then falls back, whilst the overall rate of progress of the whole macro-economy is better maintained with a smaller short-term fluctuation resulting from the first shock of the collapse.
Consequently, after giving due consideration to a comprehensive model of the whole system, the direct methods are found to be incapable of overcoming the problems caused by the slump. This is with the exception of inflation, which is temporally effective, but it results in an unethical means of delaying some of the adverse consequences.
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