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Politics : Ask Michael Burke
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To: BGR who wrote (48924)2/25/1999 6:29:00 PM
From: Mike M2  Read Replies (1) of 132070
 
BGR, product price deflation due to technological advances and rising productivity is a positive economic force. Some examples are mass production of interchangeable parts-thanks to the Razor Sharp Connecticut yankees ho ho ho, steam engines,railraods, the mechanization of farming, assembly line production, electrification of America and so on. This brought good things to life. The easy money in SEA resulted in excess investment in commercial property and industrial capacity. The Austrian economists saw that the Asian economic miracle was actually a maladjusted bubble economy and the when the bubble burst the balance sheets of both the lenders and borrowers are damaged. In my opinion, the current product price deflation is result of the bursting of the global credit bubble which created excess capacity and debt in SEA. There is excess capacity in virtually every industry. In the 20's the global credit boom -funded in large measure by the US went bust before the crash of 29 currently we see the global credit boom has gone bust and the full impact is yet to be felt in the US but it is coming. In the US the current monetary inflation has maladjusted our economy by inflating financial assets, encouraging overconsumption excess debt, and a low savings rate. most are not concerned about rising debt levels due to the financial asset inflation but all this talk about liquidity ignores the dangers of this leverage. I wish to give recognition to Dr. Kurt Richebacher- a truly outstanding Austrian economist for the Austrian aspects of the preceding commentary some of which I paraphrased from his newsletter. Richebacher Letter 1217 St Paul St Baltimore, MD 21202 Mike ho ho ho
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