Question

make the case for or against the current legal monetary policy of allowing banks to introduce money into the economy as debt.

Answer 1

Answer - My opinion is in the favor of this policy. Current economy in under recession and to boost this economy, this kind of stimulus policy was needed. The banks will inject money into the economy in the form of debt which will have comparatively low rate of interest . This will encourage the public and businessman to borrow more. The consumption , investment and production activities will start again. The output and income will grow overtime which will lead to the repayment of these debts by the banks. In other words this is an expansionary policy aimed towards reviving the policy which will definately show the positive impact in long run.