Interesting discussion yesterday

.... the Miese- austrian school of economics talks about a natural boom bust cycle in the economy.... Roughtly, and this is debatable, it is the buisness cycle. That the excesses in the econmy lead to the contractions, and vise-versa.

The black helocopter crowd, says that the point of the floating dollar, and the "non-gold backed" dollar, is to create this boom bust cycle. and then in the bust cycle "The big Bankers" swoop in and buy up assets, property etc.

The debate was if the cycle is nessisary....

if you take the economy and micro it down to the point where it is one stock, and it's one index that grows at .5% every quarter, giving you a 2% gain every year.

But imagine if at any point where it dips, the fed jumps in and hands them money untill it's back to that 2%.....

But what if the company has just been poorly run, should the fed provide liquidity? or should the market kick it in the ass, until the company realizes why it's screwing up, and then it fixes itself......

That is the "moral Hazard", when we provide free money to companies, there has to be some
"Stick" to our Carrot.
Some Tough love goes a long way.... Other than that you are breading Dependency.
Go to an Alanon meeting, they can teach you about creating dependence.

Some say, that the rate cuts are populism, and are a lack of capitalism. If Adam smith is right, we shouldn't need rate cuts.... other than that rate cuts are just a way to create inflation, and hand hard earned cash from people who save, to people who spend.

but it's fun to think about :)