> Obviously tight money can create a depression, if it's tight enough
> for long enough, but I wonder how much difference loose money really
> makes beyond a certain point. I'd rather focus on other things, like
> unionization, public health insurance, income support, etc.
>
Europe is in the midst of just such a social experiment combining pro-labor welfare state policies with deflationary tight money. The result is, unsurprisingly, massive pressure to get rid of the welfare state. Loose money is a necessary condition for sustaining social democratic policies: That's why successful periods of social democracy, like the 1960's, practiced loose money.
Doug's right to focus on the need for social democratic policies, but it's hard to hold on to those policies when GDP is stagnating.
Seth