“Mark Thornton’s The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century couldn’t be more timely. As we slide from boom to bust, the thoughtful and curious will want answers. Thornton has them.
Towards the book’s end Thornton reiterates that “artificially low interest rates are not something that is obvious to the casual observer…” Many share the view of the president, who has lived on debt, “I like low interest rates.” However, low interest rates should reflect a high savings rate and low time preferences, when in fact, as the author explains, savings rates have fallen since Nixon took America off of what was left of the gold standard, and borrowing at all levels, individual, corporate and government, are setting all-time highs in order to maintain high levels of consumption.
Ten years of artificially depressed interest rates has turned the economy into the walking corporate dead. Old school retailer, Sears, may finally give up the ghost with a bankruptcy filing. Perhaps more normalized rates will expose new era car maker Tesla, and its flim-flam man chief, Elon Musk, as a capital and tax consumer, not a real entrepreneur. “The bust or economic crisis is when these errors are later discovered,” writes professor Thornton. Musk has bust written all over hi
People look for economic answers in the wrong places. I’m continually stunned by the number of people who believe; the government, the president, or how an election comes out determines how the economy will perform. And, of course, it’s believed, boom times are normal and good, while busts are bad. Interest rates should be low, home and stock prices should be high.“