Suppose that, during the year running from the summer of 1995 to the summer of 1996, American policy makers had increased federal spending by $250 billion (3 percent of the gross domestic product), cut short-term interest rates to below one-half of 1 percent, and flooded the economy with liquidity so that long-term interest rates were held below 3 percent while the dollar weakened by 30 percent, making our goods far cheaper in world markets.