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Business Cycles

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3/22/2014 1:44:13 PM
Posted: 4 years ago
At 3/22/2014 11:02:49 AM, DanT wrote:
Which do you support?

I'm more in line with the Austrian perspective here, only with a few caveats. I'd tweak the Austrian explanation of the bust a bit. It's not necessarily that the investors and entrepreneurs invest in more risky ventures, but that they invest in ultimately the wrong ventures due to the incorrect signals being sent by the government. Then, companies take this financial capital and put it towards new production, thinking the market preferences are in line with their efforts, only to realize later that the market preferences haven't changed, and the goods they are producing are not in as much demand as they were led to believe. That causes the bust.

Also, I'm not entirely convinced of the whole Market as an all-knowing, all-powerful abstract entity, one which is able to adjust itself instantly to any shocks. The Austrian perspective places too much emphasis on the omnipotence of the market. I don't believe central planning can control the market, but I also don't believe the market is absolutely perfect.
"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."-Sterling Archer