From another forum
“productive stagnation results primarily in cyclical unemployment. In this scenario, there are NOT enough jobs in the economy to sustain full employment, due to a shortfall in aggregate demand (that can be caused by a variety of factors, such as a decline in the money supply or low consumer confidence in the market). Because that’s the case, the market will not find wage equilibrium nearly as easily as it did previously; businesses will not hire more workers because, microeconomically, they’re already producing as much as is efficient for them to do so (remember, firms produce at at the level where marginal revenue equals marginal cost). Theoretically, wages could drop to $1 an hour and, ceteris paribus, no firms will hire. So, can the market get out of such a recession itself? Well, yes…but here’s what has to happen. The market has to first liquidate a number of firms (they have to go bankrupt) so that existing firms will find becoming larger is finally microeconomically efficient. This means that perfectly good productive capacity has to be eliminated, and the people who have a stake in them to suffer, in order for the economy to regain equilibrium again. Or, we could just increase the amount of liquidity in the economy through deficit spending, maintain existing productive capacity, and have the economy pay for its salvation through the lack of GDP decline.”
i mean, i could pick through line by line. Like it insinuates, that stagnating industries need to be bailed out, and off course thats better than liquidation. This generally sounds like a keynesian shock doctrine, where you have this stagnating rotating economy, and all it needs is liquidity to employ new resources? but it ends with a curious non-sequitor.