Rude: Did you just describe a new phenomenon in American economics, or is this a continuation of practices going back over 50 years? I am talking about the boom-bust cycle - so called "business cycle" - of a growth followed by a recession that wipes out lot of the gains.
Business cycle is a feature of our economic reality since the second half of the 18th century - late 1700th.
Mainstream economics has no explanation for the business cycle whatsoever and it is generally considered an integral and unfortunate feature of capitalism that requires the state intervention.
Not untill the Austrian school of economics developed the theory of money and capital structure was the nature of the business cycle understood.
The Business Cycle The business cycle is not a feature of a free market capitalism but a result of the state intervention into monetary policy - specifically the ability of the banks/state to create money.
midnight Target: but I will say this...
we DO NOT build stuff just to keep busy. In fact if it aint sold it ain't built. Yet our orders from the last trade show were up over 30% from last year. Your "but" implies that you are arguing something I said while in reality you are just repeating a part of my statement.
I am not saying that there is no increase in econimic activity.
I am saying that an increase in economic activity caused by distorted interest rate may be unsustainable and can be followed by a recession that would wipe out most of the gains.
It's like I am sayng - "You are going too fast and using too much fuel per mile because your fuel gauge is broken. And you are going a few degrees of course because the compass is broken too. Once the mistakes become obvious, there will not be enough to reach the destination without dumping some cargo to lighten the load."
And you are saying "You are wrong, we are going very fast!"
But that's exactly what I said - we are going very fast and that is the problem. It's not the fall that kills - it's hitting the ground.
miko
