Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: smallcapmaven who wrote (81239)	3/15/2001 11:21:45 PM
From: pater tenebrarum	Read Replies (3) \| Respond to of 436258

had the Fed not begun to hike rates (they only did so in baby steps anyway, always telegraphed well in advance), the credit and asset bubble would have ended anyway - only it would have grown even larger first, and the collapse would have been even more disastrous. Time to quote Ludwig von Mises: “The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansions, or later as a final and total catastrophe of the currency system involved.” meaning that had the Fed hesitated even longer, and not attempted to rein in the boom, the end result would have been even worse. this is very important to understand: it is NOT the rate hikes that are responsible for the bust - they only determined the TIMING of it. the responsibility lies with the monetary profligacy during the boom. i do agree that the banking sector is at great risk - but it's the banking sector's own fault that that is the case, aided and abetted by the merry pranksters at the Fed. the expansion in credit has been the height of irresponsibility, and it hasn't quite stopped yet, the finacial sector (including banks,brokers, credit card cos. and the GSE's) continues to expand its balance sheets at geometrical rates.