Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: smolejv@gmx.net who wrote (11826)	12/13/2001 9:27:31 AM
From: Ilaine	Read Replies (2) of 74559

>>On deflation/depression and accompanying monetary issues I am starting to get a feeling we are mixing causes and effects.<< An event can be a cause or an effect or simultaneously a cause and an effect or just a coincidence. As long as you keep your chronology correct, you don't run the risk of misattributing whether a subsequent event caused a prior event but you can still misattribute causation for other reasons. OTOH, causation in deflations and depressions are not simple, but very complex. Vis-a-vis the current recession, I think you can make a very good argument that a significant cause is the rise in the price of energy, e.g., crude oil was around $15 a barrel at the beginning of 1999, and more than doubled by mid-2000. That's not due to the free market - crude oil prices are set by a cartel. I've already argued that an increase in interest rates was causative, as well as too great a tax burden, neither of which were due to free market forces.

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