Author Topic: Mark Thornton (Senior Fellow, Mises Institute) talks about the fake economy...  (Read 203 times)

PipMeHappy

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« Last Edit: October 14, 2020, 01:30:53 PM by Caesar »

eddieb

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Good article PMH, I dont necessarily agree with everything he says but I can see his logic.

Is this something you follow yourself, or just something you found interesting?
Disclaimer. Posts are just my thoughts,  not recommendations.  Do your own due diligence before trading

PipMeHappy

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Just something that I find interesting...

I started hearing about them when John O'Donnell (Power Trading Radio)
invited speakers from the Mises Institute on the show... I then read Von Mises'
work (freely available online) and it ticked a lot of boxes in my head. Of course
it pays to look at Kaynesian economics and Austrian economics, drawing conclusions
from both.

But the trouble with the central bank doctrine is that if you put some ten smart people in
a room you do not necessarily solve the financial problems of a nation state. The idea
of devaluing a currency is not new but the scale at which easing has been done has now
also worried the current Chair (Powell) in that signs of a heated housing market with
an underlying job insecurity factor mean that Americans could be defaulting on their
mortgages in droves as jobs are lost due to Covid19. The spiral of businesses and private
clients defaulting on debt owed to banks/lenders could hit America hard. The Fed is aware
of this and knows that it cannot give more to financial markets (i.e. more stimulus of the
scale it once did) but also cannot encourage more credit in the housing sector as this
could exacerbate the problem. The RBNZ had similar worries with the Auckland housing
bubble in recent years... It is not an Austrain economist's obsession to look at how much
influence central banks should have on the business cycle: everyone everywhere would like
to see a fairly valued market, and the financial markets in the US are clearly feeding on QE money
rather than on fair value. This is what Austrians are saying.

Hope this makes sense.

eddieb

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Americans could be defaulting on their
mortgages in droves as jobs are lost due to Covid19.

Ive heard in the UK that some people have approached their banks to say they are giving back the keys to their homes or businesses as they cant afford the mortgage only for the bank to refuse to let them, and instead have offered to defer mortgage payments for 12 months without any interest charges or penalties.
Desperate times ahead when banks are behaving like this.
Disclaimer. Posts are just my thoughts,  not recommendations.  Do your own due diligence before trading