<i>temporary, massive fall in employment, and sharp interest rate volatility are required for releasing ineffectively used capital and labor in the economy, to be hoovered up by stronger businesses</i><p>This argument really needs more economics to back it up, because the trouble with the &quot;creative destruction&quot; line of reasoning is that you get the destruction first and the creation is far from guaranteed.<p>A big fall in employment is something that has real human consequences in misery, ill-health, and even death. Likewise a capital collapse tends not so much to release capital as destroy it - both in terms of capital values and actual physical capital of abandoned buildings. Detroit&#x27;s vast areas of abandoned real estate aren&#x27;t capital that&#x27;s freed, they&#x27;re capital that&#x27;s destroyed one burnt-out building at a time.<p>Stability is vastly underrated. There are plenty of less stable economies and they do less well. Stability enables planning.<p>Also, your interest rates&#x2F;capital investment argument is the wrong way up. The normal understanding of how interest rates affect inflation is that high rates reduce inflation by reducing investment ( e.g. <a href="http:&#x2F;&#x2F;www.bankofengland.co.uk&#x2F;monetarypolicy&#x2F;Pages&#x2F;how.aspx" rel="nofollow">http:&#x2F;&#x2F;www.bankofengland.co.uk&#x2F;monetarypolicy&#x2F;Pages&#x2F;how.aspx</a> ). Raising rates makes it less attractive to make physical investments and more attractive to just leave the money in bonds. Conventionally to encourage more investment we need <i>lower</i> interest rates.