First off, we’re going to keep our notes short today at the Old Hat Factory. Today’s issue is a great one for new readers who are trying to find out where we’re coming from. “America,” or “The Old Hat Factory,” in Melbourne are the obvious answers. But we mean, “where are you coming from as investors?”
Bill answers that question in his essay today. The answer begins with a fundamental mistrust of the way the government influences the credit cycle. Actually, it begins just prior to that, with an understanding of the credit cycle itself, and how business borrowing from a nation’s accumulated savings leads to investment that creates jobs, incomes, and new production.
Why bother going back to the roots of the capitalist order? Well, if you want to know how long something is going to live, it helps to know it what kind of soil it’s been planted, and whether the root system is healthy. The Austrian School of economics understood that when credit begins to exceed available savings, all sorts of bad economic decisions ensue…at the corporate, personal, and even sociological level. But don’t take our word for it. See Bill’s thoughts.
Markets and Money