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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: accountclosed who wrote (37164)	11/21/1998 11:33:00 AM
From: Mike M2	Read Replies (2) \| Respond to of 132070

Antoine, the austrian school believes that the business cycle ( boom/bust) is caused by government intervention ( The FED)in money and credit markets. The Austrians define inflation as an unwarranted expansion of money and credit beyond the available supply of savings and needs of economic activity. This inflation can manifest itself in a number of ways - conventional price inflation cpi,ppi, ; trade deficits; asset price inflation; excess debt; distortions in the demand and output structure -malinvestments and maladjustments. Asia's malinvestments are in industrial capacity and real estate. Many loans were made based upon the assumption that manufactured goods could be sold profitably- like DRAM -ho ho ho . Japanese banks made loans based upon inflated asset values with little regard to the underlying collateral's ability to generate a stream of income sufficient to service the debt. In the U.S. we see maladjustments such as record financial asset prices, public participation in mkts, record trade deficits which help keep a lid on conventional price inflation, record low savings rate, record high consumer debt. My man Richebacher sees the U.S. economy as a debt fueled consumption bubble. Consumption in the U.S. is fed by easy credit and the wealth effect of the stock market. Why worry about savings when you can make 20%/ yr in the mkt. Mike the short answer in Will speak is easy money and credit results in economic tough love TM-g-