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Let me start from the bottom up. "[...] is there a bigger picture which I am missing that all this global recession can be a planned activity by major economies every few years/decades to achieve something bigger?" No, global recessions usually hurt all economies and though in theory one can come up with an example where someone might benefit from a global ...


Just to add to the other answers here: A constant rate is desirable because in general, information flow is not instantaneous, and delays in information flow in dynamical systems lead to oscillations. Friedman's point about the desirability of a constant inflation rate could be understood as a point about oscillations - an oscillating inflation rate ...


Take the above example: As you can see 357 is lent from 100. So the 357 can be paid back with the loan, because it never disappeared, resulting in 357% growth and no ending debt, so you can repeat infinitely.


@EnergyNumbers has said the answer in the comments but I want to make it crystal clear what it means as I think this misconception of fractional reserve banking may be widespread. First, banks can lend to other banks. There is no shell company involved unless for some other reason. Second, banks can lend to other banks, which then can lend back to the ...

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