Quote:
Originally Posted by Dragoneye
We do, do we not? Part of the speculating/risk-taking nature of our economy is a cycle of dips and rises. Um.........just like the Camaro and Mustang sales? (I've got to relate it somehow....  ) |
Just LMK if this post is too political and I'll delete it.
As I said before, speculation about the future is tied to market economies
but the difference lies in the origin of speculation. Speculation financed by genuine savings is totally different from speculation financed by false, fiduciary money. The start of boom-bust cycle is inherently tied to central banking hierarchies. It is they, central banks or state charted banks, that start unrealistic credit expansion which inevitably leads to distorted capital investment. During the boom, these investments lead to speculative pricing that will continually go up until the previous loans acquired by investors have revealed their true market rate, which is usually a fraction of what was originally thought; it is this moment that the
financial crisis begins. The
recession, or bust, begins when the market reveals that the investments, as a result of the falsely valued loans, are unprofitable. Consequently, the bust can be very long and painful but necessary. The problem with most economists today is that they believe the problem is the bust and not the boom; they believe you can have your cake and eat it too.
In summary, this isn't some inherent instability of the market economy but the result of a broke banking system.