Why does the Economy boom and bust? Justin Mohr Show on itunes/sticher
Posted by justin_mohr_show 10 years, 8 months ago to Economics
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I'm scared that you're correct about the coming bust. While I generally like large busts, this one is not going to provide any pleasure at all. ;-}
Yes. The Keynesians do not respect the boom and bust cycle. Their hubris allows them to believe they can meddle in the economy. Unfortunately, in so doing, they prolong the bust cycles. When Obama says he must come in and “mop up the mess,” in a nutshell, he and those that think as he does do not allow for the necessary corrections by virtue of “creative destruction.”
Regards,
O.A.
What baffles me is how so much money can have been shoved into the economy without inflation. The only answer that I have is that we should have been experiencing deflation, and this has countered that maintaining an equilibrium - for now. Thoughts?
The reason that free economies function well is that they have an additional requirement for economies to function besides supply and demand. That vital ingredient is marketing, better known as advertising. These marketing companies create a demand for products that consumers never dreamed of and thereby giving incentive to manufacturers to create competition for such products.
The cell phone and computer industries are the greatest example of that. As little as 30 plus years ago neither industry existed as a viable market and today we wonder how we ever lived without these products. Supply, demand and marketing is what is always the driving force. Furthermore the pricing of these products will always get lower as cdompetition increases.
Fred Speckmann
commonsenseforamericans@yahoo.com
For instance, you might say look at the great depression and how prices kept falling. But with the great depression prices were falling but the government got in the way and didn't let wages fall with them! If the government wouldn't have stepped in people still could have had jobs. Because if prices and wages both go down then people really aren't worse off after all. When the government wouldn't allow wages to come down they actually made those people worse off because now these people didn't have a job at all! Now how are they suppose to feed their families? Robbie, I think you will enjoy my next podcast coming out on Tuesday because I talk about how horrible the minimum wage is and how it hurts the people it's suppose to help. (likely story of government policies right? haha) I appreciate the friendly debate. And actually I believe it's my episode called, "Will the FED keep printing money" I talk about deflation and kind of what I mentioned above. I believe it's that one.
Reduced costs due to improved efficiency is always a good thing. It leads either to increased profits and resulting additional investment or increased pay to workers, or to lower prices, all of which are good and a virtuous cycle. True deflation is caused by lack of demand causing reductions in investment and labor. That in turn causes even lower demand and can be a vicious cycle. That is never good.
http://mises.org/library/capitalism-trea...
or buy it on amazon - Chapter 12 and 16 especially, although you might find chap 19 on Gold vs. Inflation applicable.
Personally, I consider Reisman to be a fundamental text. You either know his arguments because they make sense of things, or your know his arguments well enough to refute them.
I assume that given your first 2 books, copy editing isn't my big value add.
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