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To: Activatecard who wrote (7003)7/28/2000 8:31:03 PM
From: pater tenebrarum  Read Replies (3) of 436258
 
well, up until now every credit induced boom in history has developed and ended precisely as predicted by Austrian economic theory. there have been NO exceptions.

therefore it stands to reason that the current disinflationary credit-led crack-up boom will end precisely in the same manner. i was not surprised to see Greenspan evade Paul's question...because an answer would have had to contain some information that somehow disproves a theory that has the weight of history on its side in 100% of the known cases.

vague mutterings about productivity are not enough to do this job. because big increases in productivity are a well known element of such credit expansion booms in the disinflationary downgrade of the k-wave.

both the 1920's boom and the 1980's boom in Japan have had a tailwind of massive productivity increases through innovation.

basically what happens during such booms is that the rising productivity should actually lead to falling prices. CB's however strive for 'stable' prices. therefore, they begin inflating the money supply too much, as there are no warning signs from the inflation front.

the effect of this is the credit and asset bubble we have seen develop during the 90's and the other similar booms. malinvestment flourishes, especially near the end of the boom.

and let there be no doubt as to how such a boom ends (Greenspan KNOWS this, which is why Paul's questions never elicit satisfactory answers), in the words of Ludwig von Mises himself:

<<"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansions, or later as a final and total catastrophe of the currency system involved.”>> Ludwig von Mises, Human Action

these words are as true today as they were when von Mises first uttered them, as the Japanese experience amply proves (a case of voluntary abandonment of the credit expansion).
which is why there will be no peaceful resolution regarding the unwinding of the bubble...
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