Dr. Mark Thornton: Central Bankers Don’t Understand Booms and Busts
Jeff Deist and Mark Thornton discuss how and why central bankers don't understand deflation.
Jeff Deist and Mark Thornton discuss how and why central bankers don't understand deflation.
Barron's is writing about skyscrapers and the Skyscraper Curse. They also quote me on the subject.
Following the discovery of the Americas, Spain began a 300-year period of booms, busts, war, and mercantilism. Only in the eighteenth century did the country begin to find prosperity through liberalization of trade and private property.
More credit expansion to keep the current easy-money induced boom going is only delaying the inevitable.
Thanks to easy credit, automobiles have become very complex and luxurious, and brimming with safety features. The cost of producing these cars, however, won't keep prices from falling once the bubble bursts.
The housing bubble has been replaced by a number of new bubbles. Among them is the auto loan bubble. Car loans now last longer than ever and are going to more people with bad credit. This might not end well.