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To: Ilaine who wrote (21)	3/19/2001 4:25:05 PM
From: Don Lloyd	Read Replies (2) \| Respond to of 443

CB - The way I understand von Mises and Austrian economics, boom/busts are not caused by rational market activity but artificial market activity caused by government intervention.... My interpretation is to consider that the actual market economy is the primary focus, and the stock market is a secondary symptom. Also, the actual market economy is still making rational decisions, but the government is screwing up the traffic signals so that opposing directions sometimes will both see a green go signal. ...The problem with Austrian economics, like all libertarian ideas, is that no one really knows how they work because they've never been tried.... But most, if not all, of the alternatives have been tried, and have failed. ... The gold standard can't work when the exchange rate is regulated, and the exchange rate is always regulated. If there were a real gold standard, there wouldn't be any other currencies to have exchange rates. The problem you describe with regulated exchange rates seems to me to be exactly what will happen with the Euro. All the member states have fixed their currencies to the Euro and have given up the ability to pursue separate monetary policies almost as much as if they had tied their currencies to gold. Regards, Don

To: Ilaine who wrote (21)	3/22/2001 1:58:31 AM
From: JF Quinnelly	Read Replies (1) \| Respond to of 443

In Austrian theory booms and busts are caused by credit expansion. The bigger the credit expansion, the bigger the following collapse. "Government intervention", as used by Austrians, is the action of a central bank in keeping short term interest rates artificially low, allowing more credit to be extended than would be the case if interest rates rose as demand increased.

To: Ilaine who wrote (21)	3/27/2001 12:56:41 AM
From: Thomas M.	Read Replies (2) \| Respond to of 443

Great links. I haven't read Gerard Jackson in a while, and I had forgotten how smart he is. Some illuminating statistics: newaus.com.au <<< The 1973 OPEC oil hike is often cited as a graphic example of cost-push inflation and the cause of the Western world's inflationary woes of the ‘70s. If this explanation was correct, then the biggest oil importers would have the highest inflation rates. They did not. Germany is wholly dependent on imported oil, as is Japan, yet after the oil hike its inflation rate was 7 per cent while that of Japan's was 25 per cent; Australia's inflation rate was 17 per cent, even though it was 75 per cent self-sufficient in oil; America, which imported about 50 per cent of its oil, had a 12 per cent inflation rate; Britain, which had become an oil exporter, laboured under an inflation rate of 25 per cent; Saudi Arabia, the world's largest oil exporter, had a 35 per cent inflation rate. The reasons for the different inflation rates is quite simple. Those countries with the lowest rates of monetary expansion enjoyed the lowest rates of inflation. What the vast majority of commentators are totally unable to grasp is that the OPEC price hike was basically deflationary. The monetary response of the Western world completely swamped what was initially deflationary. (Only Austrian economic theory draws attention to all of these facts and provides a comprehensive analysis). >>>