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Politics : Ask Michael Burke

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To: wlheatmoon who wrote (42467)	1/7/1999 11:51:00 AM
From: Mike M2	Read Replies (1) of 132070

Mike, while there may be no limits to man's greed and stupidity there are limits to a mania -it just seems like there are no limits. Consumer debt and spending cannot continue to grow faster than incomes. Stock prices cannot continue to grow faster than every measure of economic value and activity. Austrian economist F.A. Hayek said : " My chief objection to the prevailing ' macro-theory' is that it pays attention only to the effects of changes in the quantity of money on the general price level and not to the effects on the structure of relative prices. In consequence, it tends to disregard what seems to me the most harmful effects of inflation: the misdiredtion of resources it causes and the unemployment which ultimately results from it. " Look at SEA and Japan for an example of what happens when easy money fuels over investment. also keep in mind that the U.S. consumption binge fueled by debt and the wealth effect of the stock market has mitigated the adverse economic effects -FOR NOW. WHEN our bubble burst the world will be in for very tough times. BTW the austrian economists define inflation as an expansion of money and credit beyond the needs of economic activity and the supply of savings. Mike hohoho

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