Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: macavity who wrote (41088)	11/7/2003 6:27:33 PM
From: Mark Adams	Read Replies (1) of 74559

We are told credit growth is bad, yet encouraged to save, which requires credit growth. If I'm to bury a gold coin every month in my back yard, then someone best be producing new gold coins or we will run out. Also a case where what is right for the individual is wrong for the group as a whole. If I forego whisky today to save my gold coin for tomorrow while everyone else spends their gold coins on whisky, then distillery builder can borrow my gold coin to create new capacity. When I retrieve that gold coin to buy whisky, everyone else has spent theirs, thus demand is slack and excess capacity exists, so I can afford to buy more whisky than had I spent the coin originally. Or I could have buried the whisky in the back yard instead of the gold coin. Hmm. I wonder if I'd rather have aged whiskey in my vault rather than gold coins. I found myself the only person left, it would serve me better than a gold coin. If everyone saves their gold coins, the distillery fails, and no one can buy whisky once retirement begins. Dancing girls don't store too well.

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