Business, Legal & Accounting Glossary
Push on a string is a metaphor posited by John Maynard Keynes to describe the inability of the Federal Reserve to get banks to loan and consumers to spend through monetary policy alone when there is insufficient accompanying demand.
According to Keynes and his followers, increasing the money supply alone is insufficient to spur the economy. Without accompanying underlying core demand, Keynes argued that adding money was akin to “pushing on a string” in terms of its futility. Keynesians claim this occurred in the Great Depression and in Japan in the 1990s. Keynesians argue that this proves that gov’t must take a more active role in generating demand as a result. There is considerable debate as to whether this is occurring now (2008) at the beginning of the Credit Crisis.
John Maynard Keynes
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This glossary post was last updated: 29th November, 2021 | 2 Views.