Please review my words:
When the market* (stock and other investments here) crashes, I want to talk to you in straight words about the mainstream. This will be an education and most will say: I wish I had listened to you before. The Federal Reserve has propped up the stock market with fiat currency and fractional reserve credit created out of thin air (digital entries into bank accounts); and these investments cannot be sustained on fake money and credit (not production) and these malinvestments into stocks will be liquidated with a crash. Keynesian economics runs the mainstream; and it is a fraudulent and deceitful. The mainstream does not care about you and me. They care about their profits; or satisfying their managing partner. Richard Duke
*The “market” to Austrian economists does not mean the stock market. It means the market economy of goods and services.
A PART OF THE REVIEW BY RICHARD DUKE OF THE BOOK: The Skyscraper Curse: And How Austrian Economics Predicted Every Major Economic Crisis of The Last Century
THE REASONS FOR THE CRASH IN REAL ESTATE PARALLEL THE REASONS THE BLOATED STOCK MARKET AND OTHER AREAS THAT WILL CRASH (SEE NEXT PARAGRAPH). Richard Duke
“The specific details of each crisis change, but economic catalysts have initiated all previous Fourth Turnings and led ultimately to bloody conflict. There is nothing in the current dynamic of this Fourth Turning which argues against a similar outcome. The immense debt, stock and real estate bubbles, created by feckless central bankers, corrupt politicians, and spineless government apparatchiks, have set the stage for the greatest financial calamity in world history.”
A general, but serious, reason to read this book— The Skyscraper Curse: And How Austrian Economics Predicted Every Major Economic Crisis of The Last Century — is to avoid being one of the millions who will be duped when the next crash (bust) occurs. Millions were and continue to be duped as to the reason for the boom leading up to 2007 and 2008 and why the bust occurred in 2008 relating to real estate.
Thornton begins with an important discussion of money creation and Richard Cantillon, writing: “… Richard Cantillon (1680s-1734?) [was] the first economic theorist and proto-Austrian economist …[he] showed how the interest rate and the money supply can create changes and distortions in the economy, a phenomenon now referred to as “Cantillon effects.”
Monetary inflation is affected by who gets the money and credit first and who gets it last. As fiat money is created by central banks, private banks are in a position to expand the amount of loans they make. The wealthy have established relationships with the banks, and they have the real estate and assets to provide collateral for the loans. Large, established companies and wealthy individuals are in favorable positions relative to small businesses and people with low or average incomes. The loans allow big companies and wealthy individuals to invest in capital goods during the boom phase of the business cycle. Central banks thereby create artificial inequality and poverty. This is the primary Cantillon effect of redistributing wealth.”
Thornton shows that the biggest winners come from the Federal Reserve and the bank system’s creation of newly created currency and credit are the U.S. Government, its large contractors, such as weapons manufacturers, big banks, and Wall Street. The losers are also revealed: the labor class consisting of private-sector workers, those on pensions or fixed incomes.
Thornton’s book goes on to discuss the causes of booms — overinvestments and malinvestments — beginning with the foundational cause from artificially low interest rates set by the central bank. Most people do not understand that fiat currency and credit are created out of thin air. They cannot imagine someone at a computer hitting keys and entering “money” or credit into a bank account. This book discusses credit creation — the main vehicle used to create new so-called money (credit) so that a layman can understand how it is created and the implications to first recipients and later recipients.
Review by Richard Duke on the Mises Institute website of the book: The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century by Dr. Mark Thornton