I'm beginning to think that this intervention,
though it will likely contribute to recession,
may alter existing trends in significant ways
and avert calamity.
here are the assumptions:
near full employment has been a result of small
business expansion across the board as they have
taken advantage of favorable credit trends and
the so called virtuous cycle. this has been the
main source of inflationary concern.
this intervention, if it succeeds in stabilizing
japan, will weaken the dollar and stabilize
raw material prices at higher levels. that,
in turn, will be a non-specific pressure on
all U.S. businesses.
Such pressures generally favor leaders at the
expense of smaller companies, so that even as
wage pressure subsides, established leaders
will also gain relative strength in market
share and reach. in the mean time, raw material
costs will stabilize somewhere below the levels
of previous years.
all in all it makes for a recession as smaller
companies start failing or get merged away, but
makes for a soft landing compared to what otherwise
would have happened.
the inflation threat is killed, though it would have
killed itself along with everything else if it came
to pass, and the deflation threat is reversed.
is this insane?
Shahar |
