Home › Forum Online Discussion › Philosophy › Ludwig Von Mises: Our Economy is Doomed (Yin-Yang Financial Cycle)
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January 31, 2008 at 2:49 am #27298Michael WinnKeymaster
note: Economic cycles in Tao (Dow 🙂 Theory should reflect cosmological yin-yang cycles. This is the unstated premise of Ludwig, who says our credit-hyped economy must inevitably exhaust itself, the healthy contraction following forced expansion. This means the dollar is doomed and eventually the US govt. will go bankrupt, causing a fundamenal world economy restructuring. – Michael
“The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.
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“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
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“The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.
“The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment.
“The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application, and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about.
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“The whole system is the acme of the short-run principle.
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“Credit expansion is the governments’ foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.
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“The notion that it is possible to pursue a credit expansion without making stock prices rise and fixed investment expand is absurd.
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“Firmly committed to the principles of interventionism, governments try to check the undesired result of their interference by reporting to those measures which are nowadays called full-employment policy: unemployment doles, arbitration of labor disputes, public works by means of lavish public spending, inflation, and credit expansion. All these remedies are worse than the evil they are designed to remove.
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“It is important to remember that government interference always means either violent action or the threat of such action. The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.”
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Ludwig von Mises is internationally known as the head of the “Austrian school” of economics, the teacher of F. A. von Hayek and of many other economists. He was for twenty-five years Professor of Economics at the University of Vienna and from 1934 to 1940 Professor of International Economic Relations at the Graduate Institute of International Studies in Geneva. He has lectured at British, French, Dutch, Italian, German, and Mexican universities and the Graduate School of Business Administration, New York University.
January 31, 2008 at 9:22 am #27299spongebobParticipanta good reason NOT to have your money in dollars. The yuan is perched to plunge below seven (7.18) yesterday. Or yen, or euros or gold. one reason I stayed in China.
But here’s a question: will the Japanese and Chinese, largest owners of overseas US debt, allow the dollar to collapse? Are their reserves big enuff to abosrb a crash? Will they cash in and then let it happen? Trading in Bank of China shares has been suspended in Shanghai due to the fact that BOC is TOO susceptible tot he US subprime crisis…..
Read the tracks….
February 2, 2008 at 2:41 am #27301Michael WinnKeymasterEconomic dependency prevents the asians giants from cashing in their dollar chips. They have no where else to put them. So instead they will slowly try to convert them into commodity wealth. Stability in China is dependent on buying food from the USA. The apple cart is too delicately balanced to be upset by any quick moves.
you don’t need to move to china to convert your money to yuan – I just invent in chinese stocks.
mFebruary 2, 2008 at 11:18 pm #27303DogParticipantI think this qoute fits.
When asked what will happen to stock prices, J.P. Morgan was once quoted as replying, “They will fluctuate.”
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