During a balance sheet recession, the transmission mechanism of monetary policy is blocked by money's function as a

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During a balance sheet recession, the transmission mechanism of monetary policy is blocked by money's function as a store of value. This is because individuals and businesses are reluctant to spend or invest, and instead hoard money as a precautionary measure due to the uncertainty and financial insecurity caused by the recession. As a result, increasing the money supply through monetary policy does not stimulate spending and economic activity as usual, as the priority for individuals and businesses is to preserve their wealth rather than engage in economic activity.

During a Balance Sheet Recession, the Transmission Mechanism of Monetary