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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (66648)7/21/2006 6:40:28 PM
From: UncleBigs  Read Replies (2) of 110194
 
Thanks for explaining your terminology. From the mises link you referenced:

his change in the pattern of consumption draws the attention of entrepreneurs—after all, they are in the business of "making money", implying that to succeed in this endeavour they must obey the wishes of consumers.

According to Mises,

"In the capitalist system of society's economic organization the entrepreneurs determine the course of production. In the performance of this function they are unconditionally and totally subject to the sovereignty of the buying public, the consumers."[3]

Consequently, this sets in motion investments in the infrastructure to accommodate a greater demand for less essential goods so to speak; i.e., more luxurious goods.

Once loose monetary policy is reversed the transfer of real funding towards the first recipients of money from the last recipients stops. This in turn lowers demands for various non-essential goods. All this in turn undermines various capital goods projects that sprang up on the back of the previous loose monetary policy and an economic bust emerges.

I think this is the difference between you and me. You believe we're still in an inflationary boom and I believe we've already begun the bust.

Clearly the decline in non-essential goods shows that we are in the midst of a bust right now.
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