[neilwilson]

You’re assuming a fixed amount of stuff and that the system is running at maximum capacity.

If there is any unemployment in the system it isn’t. It is systemically supressed. (There is insufficient spending in the right areas to employ everybody. Largely from the people that would otherwise be employed).

What you are describing is the “full employment fallacy”.

We’re demonstrably not at full employment. Which is when Everybody who wants a living wage job has one. Only then does what you say hold true.

And that’s because Interest Rate Targeting doesn’t work. If the Fed was required to hire everybody who couldn’t find another job they wanted then we’d be in the position you describe.

We’d also have an empirical test of how well Interest Rate targeting works