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Politics : Ask Michael Burke

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To: Chuzzlewit who wrote (51479)	3/11/1999 5:45:00 PM
From: Mike M2	Read Replies (3) of 132070

CTC, yes many economists accept the monetarist's explanation for the depression, I do not. I like the austrian economist perspective. The austrians believe that the bust in the unavoidable outcome due to the excesses engendered during the preceeding boom. The austrians believe that the manipulation (lowering below the natural rate - determined by the supply of saving and demand for credit) of interest rates leads to malinvestments and maladjustments in the demand and output structure of the economy. The best example of this in recent history are the asian tigers nations -seen as an " economic miracle" by mainstream economists. The excessively loose money & credit caused overinvestment in industrial plant and real estate. Now that their economies have turned those malinvestments which seemed sound during the boom destroy the balance sheets of both debtor and creditor. This is what the monetarists overlook you cannot salvage impaired loans by loaning more money. these malinvestmnets must be liquidated. BTW austrian economics was the only school to express concern about the 20's during the boom. Back to the present austrian economists were among the few voices who saw that the " asian economic miracle" was actually a badly maladjusted bubble economy which would go bust. The trouble with most economists is they feel that the lack of product price inflation is a sign of a sound economy. They ignore the low savings rate, trade deficits, finacial asset inflation-speculative excesses, credit excesses . See Murray Rothbard's " America's Great Depression" for a detailed account of the Fed's attempts to reliquify. You will also see that the economy contracted long before the money supply did. I have much more to say when i get around to it but will post some links for further reading. later mike fame.org usastores.com newaus.com.au

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