Burning Question: Won't This All Be Inflationary?

MoneyAndMarkets
by Jack Crooks

Sayonara, Conventional Wisdom

This example proves that despite the best efforts of government officials to eliminate the business cycle and fight against the forces of the market, they usually end up prolonging the problem. Had Japan allowed for a huge wave of bankruptcies, effectively clearing the deck of all the dead wood and debris, they would likely have shortened this deflationary period considerably and set the stage for the strong, well-managed companies to prosper.

This is a critical point, because if we think of a world with unlimited resources, it is the most efficient use of those resources that provides healthy growth for the entire system. It is why poorly managed institutions that waste resources should be allowed to fail, and the best managed allowed to profit without being hampered by competition that otherwise wouldn’t exist if it weren’t for the best intentions of government. Full Story.