The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: neolib who wrote (276996)	9/19/2010 4:51:25 PM
From: yard_man	Read Replies (2) of 306849

>> What I was saying is what I said: Our economy has the production capacity to make more than what we can afford to buy. Which is why we have slack in both employment and factory capacity. I didn't say anything about whether it is possible or not to tinker with our economy in a manner which could magically get demand to exceed capacity. It was your statement that implied we should invest in production capacity which I was pointed out to be incorrect << All I was observing that printing money does not call into existence the means of production or the goods. More precisely, it is not a question of excess or dearth of capacity on the whole anyway -- but a misalignment of production capacity with sustainable demand going forward -- would you not agree?? And this came about by the wrong signals given people through "wrong" (other than market) interest rates and monetary pumping. Increasing the money supply, or arbitrarily pushing the interest rate to zero or negative will not fix the long run problems of excess capacity in some areas and too low capacity in others, either ... Misalignment of productive capacity also implies misalignment in employment -- e.g. we had a ton too many mortgage brokers for any realistic sustainable need going forward. As always such misalignment is revealed by the bust -- when lower interest rates and monetary expansion can no longer support "borrowing" from the future??

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