ah, i think this is a trick question. The true anwesr is combination of A and D. With all this stimulus the economy will recover in less than 5 years BUT Once the Fed starts removing stimulus (i.e. Quantitative easing) to combat inflation, the economy will tank since the recovery was artificial. You have to remember Japan experimented with quantitative easing about 10 years after their bubble popped and it ended with normalization of interest rates to a whopping .25% before the financial crisis hit so they never did get out of that deflationary spiral. High household savings only exacerbated the situation with no one purchasing goods so i doubt we will follow their example. Since the Fed is so deterimened in preventing a deflationary spiral, and with the US consumer being vigilant, stagflation should be the biggest concern. If the government wasn't involved i truly believe we would be dealing with Japanese style deflation but with Helicopter Ben at the helm Stagflation should be the consequence. Healthy recovery a possibility but highly unlikely. Rate this comment: 0 0

by Rosset 01:51:00 AM 2013.03.14