[SR2Z]

Not the guy you replied to, but pretty frequently economic stagnation is caused because folks are stuck in an inefficient local minimum.

To end a period of recession or stagnation, governments almost always have to cause unemployment (or respond to natural unemployment) to force people to change jobs.

This is why Chairman Volcker is remembered so villanously and President Reagan is lionized.

Volcker ended stagflation under both Carter and Reagan by dramatically raising interest rates for a few years.

This led to 11% unemployment, but once folks had found new jobs Reagan was able to preside over an era of strong growth.

[philipov]

I think you meant to say "local maximum". If they were in a local minimum, moving out of it would improve conditions rather than worsen them. The situation where you can't improve without going down is a local maximum.

[rendaw]

Maybe when they get to 70 or 80% unemployment they'll finally be able to move towards a more efficient minimum.