Home > Austrian Theory Applied > The Death of Demand? Part II

The Death of Demand? Part II

Buy 'The Death of Demand' from Amazon.com!(see Part I)

To bring all this to a head:

Since the housing collapse and the “inflated-home-equity-ATM,” people are coming back to their senses… actually starting to save money again.

Demand didn’t “die.” (i realize the point of The Death of Demand is likely more subtle and probably has a lot of insight)

What’s happening is that *valuations are re-aligning* — or at least starting to — back towards what they *always should have been.* Not to mention, the hangover from all that debt.. people are realizing… “I’m in debt up to my eyeballs…..”

Now, there is less demand for fluff, less demand for short-term fixes and the latest fad or fashion. People are sobering up. The trick is now to find the value stream.

People must still live. Eat. Love. Produce. Interact. They still want to make their lives better. They just have a lot less ability to do it than they thought they did. Entrepreneurs and market participants must find the *real* value streams.. realign their activities to meet the new market demands.

What DID die is the artificial demand for non-sense, spending on which made economic numbers look all pretty and vibrant, but were the result of people having higher time preferences artificially the result of policies by conniving central bankers both here and abroad.

Steve Pavlina has a great article about prospering in the downturn that captures it succinctly that I highly recommend :

How to Make Lots of Money During a Recession 

“Consequently, businesses that provide genuine value can actually do better during a recession.”

Please note that Pavlina has some controversial ideas and I’m not an advocate for everything he spouts, but he has genuine insights that I find valuable.

See Part I

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  1. July 6, 2011 at 4:54 AM

    Bill you make some very good points. In the long run this recession make have been a good thing if it helps people realize that using debt to chase instant gratification with more and bigger just doesn’t bring lasting happiness. Rather it brings stress and anxiety. Our parents and grandparents learned these lessons from the great depression so perhaps today’s generation will learn also.

  1. June 8, 2011 at 5:32 PM

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