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To: pater tenebrarum who wrote (53600)	1/3/2001 5:38:40 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 436258

this seems a propos>> To: Wayne Crimi who wrote (87818) From: Don Lloyd Wednesday, Jan 3, 2001 11:13 AM ET Respond to Post # 87821 of 87868 Wayne - mises.org. "The Fallacy of Demand by Frank Shostak [Posted January 3, 2001] As the economic boom continues to fizzle, pundits have theorized that the downturn results from a drop in demand for goods and services. This is said to drive the business sector to unprofitability, which then further depresses stocks and commerce generally. The policy recommendation follows logically: government and its central bank must step in to prevent the economy from falling into a slump. The Fed should increase demand, the increased production of goods and services will follow suit and consequently, prosperity will be restored. This consensus view is wrong. It is not a deficiency of demand that is at the root of an economic recession but the central bank policies aimed at managing the economy. The major catalyst that sets in motion a boom-bust economic cycle is the monetary pumping and artificial lowering of interest rates by a central bank—which occurs during the boom phase of the cycle. By the time the bust arrives, the damage has already been done. A loose monetary stance by the central bank enables the diversion of resources away from wealth generating activities towards wealth consumption, but the effect is difficult to recognize because it is masked by the appearance of rising prosperity. The problem only becomes apparently during the inevitable bust phase of the business cycle. ..." Regards, Don siliconinvestor.com