As usual you spread your ignorance, Lord Keynes. Your are very impressive you know. I don’t know what to say now.
the unique Wicksellian natural rate of interest does not exist (Lord Keynes)
Saying that the existence of multiplicity of interest rates disproves the ABCT is like saying that the amount of saving can’t determine the amount of money the bank could loan. Remember that : the less people consume and the more people save, the more banks loan money, and the more the production structure lengthens. That’s the core of ABCT.
The ABCT does not explain or deal with reckless lending by banks to people for mortgages or consumer goods, and nothing about financial or real asset bubbles, and nothing about financial crises. (Lord Keynes)
Really ? H de Soto wrote :
Only securities which represent the property of the companies closest to consumption will undergo a temporary, relative decline in price, as a result of the immediate, negative impact of the decrease in the demand for consumer goods that is generated by the upsurge in saving.
Therefore it is clear that, contrary to popular opinion […] the stock market does not necessarily reflect mainly companies’ profits. In fact, in relative terms with the capital invested, the accounting profits earned by the companies of the different stages tend to match the interest rate. Thus an environment of high saving and low relative profits (i.e., with a low interest rate) constitutes the setting for the greatest growth in the market value of securities representing capital goods. Moreover the further the capital goods are from final consumption, the higher the market price of the corresponding securities. In contrast, growth in relative accounting profits throughout the productive structure, and thus in the market rate of interest, other things being equal, will manifest itself in a drop in the value of securities and a consequent fall in their market value.
If it were not for the elasticity of bank credit, which has often been regarded as such a good thing, the boom in security values could not last for any length of time. In the absence of inflationary credit the funds available for lending to the public for security purchases would soon be exhausted.
In fact the lowering of the interest rate gives the appearance of profitability and generates an excess of optimism (“animal spirits”) because everything seems to increase at the same time (consumption, investment, profit, etc.). This cannot happen when the lengthening of production structure is sustained by savings. Bubble cannot inflate without credit inflation.