Tight and Loose money

In a flow model, I talk about tight and loose goods flow, then specialize to debt.

Simple: In the inflated state, a distribution network has tight inventories. In the deflated state is has loose inventories. The results follow because the state change is faster than the goods adjustment, and so state change over shoots or under shoots. When bankers inflate, we have more stages of bankers in the production line than we have debt flowing. When the bankers have deflated, money is loose.

Deflation and inflation paths have to be asymmetric, but I am still a little confused there.

How's the bandwidth?

The shortest sample period the banker are following is about one year, with a bandwidth of two years on the short end. Bankers have simplified the yield curve to three broad stroke. At the long end, the 20 and 30 year is blurred, so we have little vision of the downward slope into negative term territory.

If we are going sideways, that is good, it means that currently decay and growth are evenly, and we are stationary. But we are seeing the broad strokes of the economy because whatever ails us was highly correlated with all aspects of the economy. We have lowered the dimensionality of our view on purpose, as part of a Ramsey search, finding the most optimum distribution for the most constrained input.