Good questions, here is the underlying economic principle that underpins the physical reality ;
On the subject of forward demand Von Mises gives us this;
We may call p the total supply of capital goods available on the eve of credit expansion, and g the total amount of consumer goods which these p could, over a definite period of time, make available for consumption without prejudice to further production. Now the entrepreneurs, enticed by credit expansion, embark upon the production of an additional quantity of g3 of goods of the same kind which they already produce, and a quantity of g4 of goods of a kind not produced by them before.
For the production of g3 a supply of p3 of capital goods is needed, and for the production of g4 a supply of p4. But as, according to our assumptions, the amount of capital goods available has remained unaltered, the quantities p3 and p4 are lacking. It is precisely this fact that distinguishes the " artificial" boom created by credit expansion from a "normal" expansion of production which only the addition of p3 and p4 to p can bring about.
From HUMAN ACTION, Pg 557 Chapter "Interest, Credit Expansion and The Trade Cycle"
Why this information? Because our MSM group of securities are representative of the p4 and g4 within the trade cycle, all of them as contributors of p4 or g4. Very important to register this as understanding |
