Stated differently, fewer goods and worker hours are now involved in activities that, although perceived as necessary insurance to sustain valued output, in the end produced nothing of value. Those intermediate production and distribution activities, so essential when information and quality control were poor, are being reduced in scale and, in some cases, eliminated.
Those who will need to decide where to cut will need to make tough decisions, but in the final analysis, after all of the cuts, this will be an expansionary budget, and I feel sufficiently at ease with such a budget. The Bank of Israel’s monetary policy is successfully keeping inflation within the target range most of the time.