Granting liquidity too liberally, on the other hand, and propping up institutions without sustainable business models, may also mean that the water used to extinguish the fire ends up causing more damage than the fire itself. In the words of the American economist Allan Meltzer: “Capitalism without failure is like religion without sin.
In the context of investment profitability, profitability from business fixed investment is likely to improve and the extent of the monetary easing stimulus to encourage investment is likely to strengthen, owing to a rise in the rate of return on capital due to economic recovery combined with the decline in real interest rates mainly reflecting a rise in inflation expectations.