Jim's explanation is probably clearer than mine. On Mon, Nov 30, 2009 at 11:15:51AM -0800, Jim Devine wrote: > Michael Perelman wrote: > > I suspect that Hayek took a lot from volume 2 of Capital. > > I understand Bohm-Bawerk and others helped with this learning. > > > ... Interference with the market could > > create problems, such as inflation, which would upset the balance > > between the production of capital goods and final consumer goods. The > > result would be a crisis of disproportion, somewhat like the imbalances > > in volume 2 of Capital. > > The key, as I understand it, is when the actual interest rate got > below Wicksell's "natural" interest rate, encouraging excessive > capital-intensity (roundaboutness) or above it, encouraging > insufficient capital intensity. I guess there were other kinds of > disproportionalities, so that the "structure of supply" didn't match > the "structure of demand." > > > Part of his crisis theory also resembled Marx's discussion of > > fictitious capital in which financially-based decisions would cause > > prices to become increasingly disconnected with the underlying values... > > Finance (inflation of credit, though not necessarily of prices) could > cause the differences between the actual and natural rates, but so > could government policy. > > BTW, the Austries and their colleagues saw "inflation" as happening > during the 1920s even though prices were essentially flat (at least in > the US and most other major capitalist countries, but not in Germany). > Though this was credit inflation, not price inflation, they did like > deflation and the Andrew Mellon strategy. They wanted "nature to take > its course," to purge the economy and to allow new prosperity. > -- > Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own > way and let people talk.) -- Karl, paraphrasing Dante. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l
-- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
