“the volume of employment is uniquely correlated with the volume of effective demand measured in wage-units, and that the effective demand, being the sum of the expected consumption and the expected investment cannot change, if the propensity to consume, the schedule of marginal efficiency of capital and the rate of interest are all unchanged. If, without any change in these factors, the entrepreneurs were to increase employment as a whole, their proceeds will necessarily fall short of their supply-price
This Economic dither can be summed up much easier in order to cut the the Econ babble that has be used for decades to dumb down the public so they weren't aware they were getting shafted.
This means that you can't raise prices, hire new people, pay them lower wages and expect the economy to pick up and still make a profit. This is the current issue with entrepreneurs. They can't just hire people for the sake of hiring and if the economy is stagnating with wages falling and interest rates staying low there is a flat to downward trend in economic growth.
Even if we see a huge uptick in hiring, it will be of little effect on economic growth if people are going back to work at lower and lower wages. Times have changed and we are seeing the result of government failure. It is not a failure to do anything it is the failure to stop the banking lobby from dictate policy.
Our country can not survive or thrive when we are stagnating and staying at such a high rate of unemployment. The continued low interest rates do little to stimulate the economy is this environment and it makes lower wages even more problematic because their is no way for the average person to increase their income through saving. Money in a savings account is just free money for the banks. They can leverage the funds up to to 10:1 and still get 0% money from the Fed.
We are in a system that is geared toward helping the top 1% survive at the expense of everyone else. Read the rest of the story at Naked Capitalism.
Will internal devaluation work? « naked capital