Posts Tagged ‘cheap credit’

The Death of Demand? Part I

June 8, 2011 3 comments

Buy 'The Death of Demand' from!I was recently introduced to the title of the book “The Death of Demand” by Tom Osenton (I have yet to read it, and look forward to so doing).

Taking the title at face value, let me share some thoughts from an Austrian autodidact’s perspective .. bear with me on this, and it culminates in Part II:

The US Dollar is currently the world reserve currency. So What? So, this means the Federal Reserve can perpetrate to print profligately porcine piles of green pieces of paper without creating any real value … and trade said paper (or digital equivalent) for real goods and services around the world.

The impact on the American consumer is access to perpetually cheap credit (so long as the Fed keeps interest rates low … which they do by fiat as if the interest rate does not get created organically through market forces….)

Cheap credit for too long a time, coupled with Asian “weak” currency policy (making their exports to us artificially cheap) has led to a display of gluttony by the American consumer likely unparalleled¬†since the city of Rome at the peak of its wealth-siphoning power.

But cheap credit and manipulated interest rates cannot facilitate long-term prosperity. The distortions in the allocation of capital created by these machinations plant the seeds of their own correction (a “bust”).

See Part II