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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (52045)	6/4/2006 7:46:35 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

Its tough to accept that capital invested in nearly useless things (malinvestment) is actually lost and gone to money heaven. Keynesians believe they can easily replace the lost capital with new loans, but they can't. The lost wealth cannot be replaced by either credit or paper. Society is merely impoverished by malinvestment which occurs during a bubble. The downturn is the recognition of this loss. If a society burns down 50% their buildings and food supplies, members of society will experience a dramatic decline in the standard of living, even if new credit is made extremely abundant or new money is printed and mailed to each citizen. Its an obvious fact, even if you don't believe it. .