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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (83141)3/20/2001 11:24:57 PM
From: Don Lloyd  Read Replies (1) of 436258
 
hb -

...it is a mistake to believe elimination of cycles is a worthwhile goal imo, because it simply can't be done. cycles are a natural phenomenon...the ups and the downs of the business cycle are a good thing. you need periodic phases of recession to give the market an opportunity to clear out whatever malinvestments have accumulated during the up phase of the cycle. this is the whole point of the argument seems to me: whether interference is a good thing or not. i say it is the monetary authorities interference which has created the fantastic boom with all its attendant imbalances.

I believe that I have seen Austrian School commentators claim that business cycles are entirely the result of intervention, but I agree with you that they are natural, especially sector by sector, but that intervention greatly magnifies the degree of malinvestments by synchronizing them in time and across sectors. I also differ with what appears to be Austrian theory in that I believe malinvestments are only truly recognizable in hindsight by their results. An investment that in isolation is rewarding may collapse when unknowing made in a sea of other competing investments.

Regards, Don
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