Post by RS Davis on Nov 6, 2003 7:49:56 GMT -5
[glow=red,2,300]Sean Corrigan Wrote:[/glow] As all Austrians should be aware, recessions themselves only come about as a reaction to the unsustainable tempo of the preceding Boom. They also know that, at root, the Boom itself always has its genesis in an unwarranted expansion of the means of payment.
When the central bank proactively encourages--or retroactively endorses--a credit expansion, the subtle interconnections between supply and demand; investment and saving; consumption and production; and impatience and postponement--that is to say, demands today and requirements tomorrow--all become disrupted.
In the end, after a seeming period of extraordinary vitality, the economy is seen to be suffering from a cancer, or perhaps an auto-immune disease: one where the costs of resources no longer correspond to the prices realized from their use in a manner which sufficiently rewards entrepreneurs and their backers, so that they will--or even can--maintain and extend their stock of useful capital equipment, and continue to support an equal or greater payroll outlay (whether in numerical or remunerative terms) and so perform their vital role of driving the community onward up the slopes of advancing material progress.
When the central bank proactively encourages--or retroactively endorses--a credit expansion, the subtle interconnections between supply and demand; investment and saving; consumption and production; and impatience and postponement--that is to say, demands today and requirements tomorrow--all become disrupted.
In the end, after a seeming period of extraordinary vitality, the economy is seen to be suffering from a cancer, or perhaps an auto-immune disease: one where the costs of resources no longer correspond to the prices realized from their use in a manner which sufficiently rewards entrepreneurs and their backers, so that they will--or even can--maintain and extend their stock of useful capital equipment, and continue to support an equal or greater payroll outlay (whether in numerical or remunerative terms) and so perform their vital role of driving the community onward up the slopes of advancing material progress.
- Rick
