So in your omniscience you decide what is considerd “needed investment” and un-needed investment? Do you understand you are making a statement that only a divine being, or God could make?
If the money supply does not change there can simply be no universal over-investment. The investment comes directly from savings. If a single company over-produces and finds that there is a surplus of products, they will either correct that or be purged from the market. In either case the destruction is isolated to that specific group of capital, not to the economy as a whole. If purged from the market they will no longer be wasting precious natural resources.
Likewise it is entirely nonesensical to state that under the conditions where the money supply is not changed, that universal over investment would occur. In such scenario’s investment only occurs by the will of the consumer, if universal investment occurs than it is because of the consumers that it did so. An economy is nothing more then addressing the ends/needs/desires of individual consumers, in the case of universal over-investment the economy is doing specifically what it was designed to do. Satisfying the needs/demands of consumers. In such a case no bust would ever occur.
Without credit new business expansions cannot occur unless savings/investment is involved!
You are no divine being to judge the decisions of other individuals. To make on their behalf decisions that are considerd “needed” or not “needed”. Your error is you presume to know whats best for other people more then they themselves do. You also argue that over-investment occurs but you cannot coherently explain why. This is the “Animal Spirits” argument of Keynes that you subscribe to.
That wasn’t the point I was making, GO back and actually re-read the statement that was made. At least in that context I was not referring to the GD.
And what makes you think your projects are desireable by consumers? By what market metric’s will your arbitrary projects be judged? If you knew what projects would be universally desirable by individuals why not just start such a business on the market right now? No intervention is necessary. If you knew what projects consumers wanted you could start it tomorrow and be a billionair within a few short years.
Oh, but you can’t because you don’t know what the needs/wants/desires are of every man women and child on earth. Your statement advocates government planning.
And how will you pay for such arbitrary projects?
How? Explain to me how an increased purchasing power is harmful please. Yes a sudden rise in purchasing power disrupts economic calculation, just like a sudden drop. But an overall gradual rise in purchasing power is harmful how? Please address this for us, we have asked countless times.
Why is it bad that a consumer can buy more with their dollar? Why is it bad that the economy overall eventually produces more? Why is it bad that a hoarder, thanks to the law of marginal utility, will not keep his billions in the bank but invest it some where?
Your assumption are
A) Hypothetical
B) Logically incorrect
C) Not an actual example of the problems observed in reality.
It seems to me that it is you who refuses to acknowledge the Austrian argument. When will you actually attempt to critique us rather then make assertions?
Thats exactly what we are doing my friend.
Again your omniscience precedes you. You attempt to decide on behalf of others how much savings is too much, and how much is not enough.
Also please back up your assertion about foreign savings. I think you will find that those countries where savings is the highest, we witnessed the greatest economic growth over the past 10 years. Ironic that your own argument goes against you.
If any school of economics looks globally, it is most definitely the Austrians. You don’t need to keep repeating this. We are considering the global consequences. Gradual global deflation is a sign of economic growth. Not a sign of armageddon.
No Deflation makes the gains that much greater. It does not in any way un-motivate investment. Especially if there is a large sum of cash waiting around in a savings stock pile. People will see the excess cash and, considering the marginal theory of value, will be more willing to depart with portions of their cash holding for investment.
It cannot be shown in any study that savings is universally a cash hoarding mechanism. Instead it is shown around the world that savings is typically held in some type of investment vehicle, in one form or another.
You consistently seem to ignore a very fundamental point.
The MORE savings a man has, the MORE likely he is to invest. The LESS SAVINGS a man has the LESS LIKELY he is to invest. Why is this so difficult?
And they made too many bread factories becuase the investment was directed arbitrarily, and not by the consumers. People did not “WAKE UP” and say hey we have too many bread factories. It was those business’s who came into action with poor business models or with projects that the consumers were not interested in. Normally bankers hold a very high criteria for lending money to new business’s, that is no longer the case under a cheap credit policy. The business’s came into being due to easy credit. Business’s were able to expand on credit, not on profit, revenue, or savings.
Chloe asked you this
It would seem to me sir that you are more concerned with being right, then actually finding the truth about how these mechanisms work and function.
You name it. It’s all explained. It follows logically, and follows empirically. Now if you disagree with us, please address the holes in our reasoning, and disabuse your exhausting attempt at repeating your assertions. Argument ad nauseum will not grant merit to your argument my friend.