Based on real world experience since August 2008, the consequences of intervention are about the same as the consequences of non-intervention, except that they happen a few weeks later.
Disagree. Once Lehman failed, the credit contraction triggered a deflation that would have had far greater consequences in the absence artifivial liquidity. Nobody would be able to get a loan, nobody could sell their house, prices fall, mortgage indebtedness larger than asset value becomes widespread and more banks fail. Textbook 1930’s.
Soverign default is deflationary as well. The market is screaming that at you right now.