Total systemic debt doubled during the 2000s. Yet economic output only went up 40%. That means that none of the output increase was actually purchased with the fruits of output - it was all bought with debt, and then some.
The Fed has reduced the cost of business borrowing to the lowest levels in decades. It has seen to it that liquidity is widely available to banks and businesses. It has kept the economy from deflating and it has kept inflation under control.
You can't avoid an inflation you previously ran to the limit of debt service coming back to earth. That's not deflation, it's reversion to the mean, and further, the natural state of all economies is deflation. That's the fallacy. It's a damned dangerous fallacy too.
A recent Wells Fargo/Gallup Small Business Index survey reports that about 80 percent of those who were reluctant to hire said they were afraid revenues wouldn’t increase enough to justify the expense. The problem is not the availability of credit. The problem for businesses, small or large, is generating enough final sales at a profit; the need is for revenue that exceeds the expense of incurring that revenue.
You can't have revenue increases when input costs are being driven by printed money.
You want to see a recovery? We first have to take care of the credit bubble. It will hurt. That's guaranteed.
But there is no other way. The Federal Government is spending about double what it can actually spend on a sustainable basis. It too doubled in size from 2000 - 2010. So did the systemic debt. Both have to by cut in half to restore anything approaching systemic balance.
We can either do it, or we can keep pretending it can be avoided, and instead of a 50% decrease we run the risk of a catastrophic collapse.
Your move Mr. Fisher... and the rest of you.