tag:blogger.com,1999:blog-6042078006668554033.post6388410963085554106..comments2023-05-27T05:14:43.096-04:00Comments on Freedom Choice Cost: Do not feed the mouth that bites youDean Kalaharhttp://www.blogger.com/profile/05840290107017110306noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6042078006668554033.post-8948907492535476952009-05-12T09:10:00.000-04:002009-05-12T09:10:00.000-04:00Who was talking politics? This is economics. ;-)...Who was talking politics? This is economics. ;-) Interest rates SHOULD be set by supply and demand. The only way this happens is with market-selected commodity money (eg gold). In this case saving = investing since the only money there is to invest has already been saved. The boom and bust is created by the FED who invent interest rates out of thin air. Somehow I left that out my original post!Nathannoreply@blogger.comtag:blogger.com,1999:blog-6042078006668554033.post-552082223597164172009-05-11T21:03:00.000-04:002009-05-11T21:03:00.000-04:00How can you talk politics on the day of the "House...How can you talk politics on the day of the "House" finalie; which by the way was awesome to quite possible the tenth degree.Austin Wnoreply@blogger.comtag:blogger.com,1999:blog-6042078006668554033.post-40853337159197679162009-05-11T13:34:00.000-04:002009-05-11T13:34:00.000-04:00You are correct sir. Although interest rates are s...You are correct sir. Although interest rates are set by supply and demand. Unless, of course, you have a monetary policy that believes it is the role of the FED to micro-manage the economy to eliminate and booms and busts. Sadly, this type of Greenspan thinking created the booms and busts. Economic cycles are a part of life, huge swings are the result of poor policy.Dean Kalaharhttps://www.blogger.com/profile/05840290107017110306noreply@blogger.comtag:blogger.com,1999:blog-6042078006668554033.post-40149771456340960902009-05-11T10:19:00.000-04:002009-05-11T10:19:00.000-04:00Economic booms, the recent one included, are the r...Economic booms, the recent one included, are the result of artificially low interest rates. As interest rates decrease, consumers increase their spending and (conversely) decrease their savings. This spurs investments in capital goods (houses, etc.) to support the increased spending. This causes an imbalance between saving and investing, which sets up (due to the time structure of the economy) an unsustainable growth phase, which must end in bust. See Ludwig von Mises on the Austrian Theory of the Trade Cycle (http://mises.org/tradcycl.asp).Nathannoreply@blogger.com