Sublime

Furthermore, in the nature of things, credit contraction is severely limited—it cannot progress beyond the extent of the preceding inflation.14 Credit expansion faces no such limit.

The malinvestment caused by credit expansion diverted production into lines that turned out to be unprofitable (i.e., where selling prices were lower than costs) and away from lines where it would have been profitable. So there was overproduction of specific goods relative to consumer desires, and underproduction of other specific goods.

it would be better to have that inevitable recession as far into the future as possible, and preferably with a little inflationary cushion and some room for active policy responses. A recession in 2011 or 2012 would be problematic, if not catastrophic. Rates are as low as they can go. Higher deficit spending, as a way to address recession, is not i

That’s how Japanese broad money supply grew more slowly than average government deficits. With back-of-the-envelope numbers, about 5% in new broad money was created per year by monetized fiscal deficits and public debt accumulation, which was offset by about -2% of money supply destruction from private deleveraging per year. This resulted in roughl

The Great Depression was a failure not of capitalism but of the hyperactive state.

If you believe in deflation, U.S. Treasuries offer great value. Unsurprisingly, the biggest proponents of deflation are David Rosenberg and Lacy Hunt. Both work at firms that manage a lot of money in bond funds.

The bust was staved off through a series of rapid interest rate reductions made by the US Federal Reserve; and these reductions marked the beginning of a lengthy period of ultra-easy monetary policy.

The Keynesian view of the economy is, of course, at complete odds with reality. If Keynes's model had any truth to it, it would then necessarily follow that there can be no example of a society experiencing high inflation and high unemployment at the same time. But this has in fact happened many times, most notably in the United States in the 1970s

What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the “natural rate of interest”).