The substance that got us high is bringing us down. This axiomatic economic rule has been bolstered by a number of recent economic releases. Yet so many economists, and even leading business publications, are locked into an outmoded Keynsian belief that the economy's fate lies in the hands of the central bank. Animal spirits,' the British economist John Maynard Keynes once wrote, can hold the key to important economic variables, such as business investment. Warning Warning Keynes lost his shirt investing in the stock market in the '20s and '30s, and anyone who buys stocks on the basis of a Fed-engineered economic recovery is danger of that too.
Consumer confidence is shot and factories are slowing.
So here's why the elixir of easier money won't work for long. Anecdotally, we've all experienced how superfluous technology can become. Whenever Detox writes on business software firms, a flurry of email arrives saying how infuriating it is to deal with egregiously overpriced products from the supplier in question. The profitability of using and producing such software and equipment had been overestimated to a degree, and disappointing sales and a better appreciation of risks had resulted in much slower growth in production of such equipment and sharp deterioration in the equity prices of high-tech companies. The impressive productivity numbers of the past five years have led most people to believe that the boom wasn't leading to poor investment choices.