onsdag, april 16, 2008

Ikke en New Deal igen

Mises.org har en glimrende artikel, der er værd at læse i en tid hvor mange, af frygt for økonomisk depression, kræver statslige indgreb.

"The editor-at-large of American Prospect and L.A. Weekly argues that the economy is simply prone to inflationary periods followed by economic collapse, and that while the private sector demands to be left alone during the former, it demands government bailouts in the latter.

And what causes these inflationary episodes to which the market is addicted? Meyerson doesn't say. For all we know, they reflect some inherent deficiency in the market system. Perhaps they share the same root as the common cold.

But it just ain't so. Inflationary, bubble-like periods don't erupt in a vacuum. They result because the government increases the money supply and sets in place unsustainable economic growth. When this happens, the resulting boom makes a bust inevitable. Meyerson shouldn't blame the market for inflationary booms. The market never creates legal tender laws. Federal Reserve notes have been around for almost 100 years.

But what about when the bust comes? This is when pundits like Meyerson dearly need lessons in economic theory and history. During an economic correction, characterized by a decline in economic activity resulting from the overproduction during the boom, prices, wages, and interest rates must adjust. In fact, the quicker they do, the faster the correction, and the shorter the recession.

Consider the widget manufacturer whose inventories are clogged with widgets no one will buy at going prices. He can't produce more widgets until he sells the ones he has. He might lay off workers until his inventories fall, which happens when he lowers his prices, perhaps selling at cost or even at a loss. Growing inventories are one of the forces creating downward pressures on prices for good reason.

When this happens and inventories are reduced, he may be ready to expand output again. In other words, he recovers. This, in a nutshell, is what happens during any market correction across many industries."

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