However, given that high economic growth continued in many years prior to the current crisis, the possibility that adjustments of excesses will take considerable time cannot be ruled out. In addition, reduction of excesses in economic activity and resolving impaired assets in financial institutions are two sides of a same coin.
We believe a non inflationary environment is such a platform because it promotes long-term planning and capital investment and keeps the pressure on businesses to contain costs and enhance efficiency. The Federal Reserve’s policy problem is not with growth, but with maintaining an effective platform.