Can speculative bubbles occur in the unhampered market? Certainly there would be relatively less, but is there any merit to the notion of so-called positive-feedback loops in the absence of credit expansion? Is it really impossible, in absolute terms, for a speculative bubble to exist without it being financed by credit expansion?
I've searched the forum and have come across a few threads that didn't delve too deeply into this question, so I hope this thread might really dig into it a little more.
I know that some French guy published a book about speculative bubbles that says that Tulipmania was really a result of newly circulating money (forgive me, I haven't gotten around to reading it yet so I don't yet know the specifics), but had the money supply been more stable, could such "irrational" behavior still have occurred?
Mises on Speculative action
LVM: However one twists things, one will never succeed in formulating the notion of "irrational" action whose "irrationality" is not founded upon an arbitrary judgement of value. Let us suppose that somebody has chosen to act inconstantly for no other purpose than for the sake of refuting the praxeological assertion that there is no irrational action. What happens here is that a man aims at a peculiar goal, viz, the refutation of a praxeological theorem, and that he accordingly acts differently from what he would have done otherwise. He has chosen an unsuitable means for the refutation of praxeology, that is all.
However one twists things, one will never succeed in formulating the notion of "irrational" action whose "irrationality" is not founded upon an arbitrary judgement of value. Let us suppose that somebody has chosen to act inconstantly for no other purpose than for the sake of refuting the praxeological assertion that there is no irrational action. What happens here is that a man aims at a peculiar goal, viz, the refutation of a praxeological theorem, and that he accordingly acts differently from what he would have done otherwise. He has chosen an unsuitable means for the refutation of praxeology, that is all.
Human Action -LVM
filc: Austrian's don't consider standard fluctuations in the market as being bubbles.
Austrian's don't consider standard fluctuations in the market as being bubbles.
I know (from other debates) that you define a bubble as being "the thing that Austrians would like to call a bubble" in which case I can, by definition, never describe an alternative phenomena that you would accept as a bubble however bubble-like it appears to the rest of us.
What Went Wrong with Economics
mickanomics:I know (from other debates) that you define a bubble as being "the thing that Austrians would like to call a bubble" in which case I can, by definition, never describe an alternative phenomena that you would accept as a bubble however bubble-like it appears to the rest of us.
No. It's not what Austrians would call a bubble. It is what a bubble is. Even neo-classicals would agree a bubble is a bubble, not a market fluctuation.
You aren't describing an alternative phenomena. You are trying to redefine existing terms under Mickanomics, into any ad hoc thing you want it to be.
The issue here is the limit of your knowledge about economics, not some dishonest debate technique or Austrian eccentricity.
You should really need to read this (the whole thing),
http://mises.org/books/econforrealpeople.pdf
to understand economics the way Peter Schiff, Marc Faber and Jim Rogers understand economics.