Profits first, financial adjustment second

Free Exchange asks a question, Can output recover before investment does?

The answer, according to Quantum Economics, is yes, output always must give a signal that it meets economies of scale before credit can transmit that information. In a multiple good model, in which money is just one of many goods, then money distribution relies on its ability to react fast with its own inventory adjustments, faster than other of goods. The job of money is to give a coherent account of inventory adjustments in other goods, so it must see them before it reports.

Within observability, most sectors see money adapting as fast, or faster than other goods, but this is the Money Illusion. Generally one systematic goods constraint is much harder than constraints to other inventory systems. The one constrained good reaches a satisfactory solution, and the happy news is transmitted to other goods as fast as finance can adapt.