Dangers of Demand Management Policies

To the degree that recessions are attempts by the public to save, then this is done for a reason. Typically that they are not being paid enough in wages to purchase output. If the government steps in and buys output on their behalf, or boosts wages via tax-breaks for workers, then this allows demand to become disconnected from wages.

So if there is going to be a demand-maintenance policy, then government needs at the same time to have wage maintenance policies, in the form of highly progressive tax-rates, excess profit rates, etc.

Recessions are natures way of setting fire to profits and asset prices because they are not supported by the wages of employees. If we are to prevent these fires, then we need to also institute controlled burns via tax policies.