Tip, Part of this is a metaphysical exercise in mathematical logic: we can just make up money out of thin air. Profits are made of money. Ergo, we can obviously make up profits out of even thinner air. <g>
First of all, nobody should be both an Australian and an Austrian. Too damned confusing. So, Mr. Jackson should immediately move to New Zealand and become a Kiwi Austrian, which is much easier to digest. <g>
I totally agree with the Austrian case in the very long haul. But part of it has been and could continue to be fallacious in the short term. If creating excess credit can make the market go higher, that creates profit margins for many service companies, as many are in the financial arena. Which is why I find the Austrian concentration on nothin' but manufacturin' to be misleading in the short term. If things were totally based upon mfg. profits, then we've been in a depression since 1995. And the simple fact is, we haven't been.
Also, the comment about a bull market starting from stock already overpriced is a reality. It happened in 1998. Big Time.
So, here is what I get from the Austrians: Some day Alan da Printer is going to hit zero on rates. Fannie and Freddie's balance sheets will have teetered over on their sides after hitting the iceberg of reality. The service economy will be taken off its speed habit cold turkey. Mfg., already in depression, won't get much worse, but the market will go to heck in a handbasket. And, as always, there will be a number of stocks and cos. that do o.k., and the way the markets are rigged, make the indices look much better than the reality. But still pretty bad.
The big question is WHEN. I don't think the Austrians are awfully helpful with this W. They are great on the WHAT. And the WHO. And the HOW. The When and Where don't really fit their models well. |
