Monday, July 11, 2005

Booms and Busts

Ralph Waldo Emerson wrote, "Cause and effect, means and ends, seed and fruit, cannot be severed; for the effect already blooms in the cause, the end preexists in the means, the fruit in the seed." And so too, does the bust pre-exist in the boom. In case you are unaware, "business cycles" are created by central banks and fiat (paper) money.

Central banking (the Federal Reserve) is central planning of the economy. If you're a fan of it, chances are you resemble more closely a communist than a free-marketeer, like myself.

You can read more about the Austrian Business Cycle theory (ABC) here.


Blogger This is how I called it said...

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7:00 AM  
Blogger This is how I called it said...

"The gap in our economy is between what we have and what we think we ought to have - and that is a moral problem, not an economic one."
Paul Heyne

One of the characteristics of a truly moral person is to be able to navigate in complex situations where incompatible principles compete. That ability, which pertains to economic, managerial as well as ethical principals, is part of what Aristotle called practical wisdom. Aristotle did not denigrate principals but he did understand the impossibility of applying them rigidly. There is a difference, though, for violating a principle for reason of convenience and doing so because there are other principles at stake.

7:17 AM  

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