On Saturday, December 22, 2001 1:48 PM Spudboy100@aol.com wrote:
> This is an article worthy of an Edge.org edition
>
> If you wish to view it online you'll need to sign up with the (free)
NY Times
> online service.
>
>
http://ea.nytimes.com/cgi-bin/email?REFURI=http://www.nytimes.com/2001/1
2/22/arts/22TECH.html
>
> The Unforeseen Disruption of Moving Ahead
While I don't think this article is totally off the mark -- all change,
even technological change, has the potential for disruption -- it
overlooks the massive disruption caused by the Fed manipulating the
money supply -- to wit, inflating said supply over the last several
years. This disrupted the capital structure of the whole economy and
had less to do with Schumpeter's destructive entrepreneurship than with
just plain distortion of market signals, such as relative prices and
interest rates. (If the market is functioning well -- undisupted by
artificially created disequilibria -- there will still be disruptions,
business failures, and the like, but inflationary disequilibria create
chronic problems that appear not as low level noise in market signals,
but as systemic distortions that lead to unavoidable and irreversible
losses across the whole economy. See "Macroeconomics for the Real
World" http://uweb.superlink.net/neptune/Macro.html and the works cited
therein.)
There's also a huge risk component to the current Bust that was perhaps
less apparent in previous cycles. Roger Garrison delves into this in
his _Time and Money: The Macroeconomics of Capital Structure_, though
his concern is more with the early 1990s recession and with the cycle
with respect to marcoeconomics. I.e., it's not a play-by-play
recounting of what went wrong. I suspect such an analysis won't be
forthcoming for a few years -- until most of the damage is unveiled.
(The institutional setting, too, plays a big role in how a cycle will
play itself out.)
This really drove the Boom to its inevitable Bust. Absent such
disruptive monetary forces -- which I believe are part and parcel with
central banking -- we might have had, instead, sustained economic
growth. Yes, some business, even some big ones, might have went under,
but overall the economy would be in good shape.
Happy Holidays!
Daniel Ust
http://uweb.superlink.net/neptune/
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