Various

[Garth Zietsman]

There has been a major turnaround in the Republican race.  Gingrich has dropped and Romney almost fully recovered his front runner status.  Obama has maintained his recent gains.

The gold price is rapidly making nonsense of my prediction.

An interesting problem - why are Apple shares priced so low?  They have huge profits, record capitalization, great management, a superb outlook, etc etc.  Yet they have a P/E ratio of 10 (after some payment).  By that measure management are failing very badly in their duty to look after shareholder value.  Or something is wrong with some or other investment theory.

Lately I have been spending a lot of time on the Business Cycle versus Keynes debate - especially since its just me debating half a dozen able fellows.  But get this - some people (some of whom will be paying me) think I have more important things to do right now than argue on this forum.  I also want to think about the stuff Chris sent me and Gareth's last reply.  I have a very convincing model showing that aggregate demand (in the absence of any structural problems) can occur and I want to think about how Austrian business cycle theory applies to it.  I will return to the exchange early next week.

Cheers

Garth

[Gareth Brickman]

Sure. Look forward to your response.

Still planning on coming up to JHB mid-February?

Garth

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[Garth Zietsman]

Yes still coming up and still want to meet everyone.

[Leon Louw (gmail)]

I haven't followed the exchange at all so may be missing the completely -- just dipping my toe dangerously in the water as I pass by. 

The point may and should have been made that "demand" can be a nominal monetary idea (Keynesian creation of zeros) or "real" demand (a specie claim acquired by supplying real wealth).  I doubt that monetary "stimulation" can increase "demand" in any meaningful sense.  All it can do is divert "demand" from A to B, ie transfer wealth from people who create "real" wealth to people who don't.

The substitute wealth produced in response to such diverted "demand" is the seen; what was not produced because real demand was eroded is the unseen.  The former is invariably what's regarded as the net fruit of "increased demand", as if it is a free lunch.

I have no idea how a model could address the vexed question of whether the former exceeds the latter, either ad valorem, or (what really matters) subjective value.  An attempt to establish whether there is a net gain from "increased demand" one would have to quantify what's lost, which seems inherently impossible.  I have no idea how one could estimate what would have been produced but for subverted demand, ie what would have been "demanded" instead?  Or, more importantly, what's it's value (not price) might have been.

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Leon Louw

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[jacos...@gmail.com]

The smoke and mirrors of keynesianism reminds one of the (theoretical) perpetual motion machines that are also designed to stay in motion for ever without any need for real energy or effort to be applied...

Sent from my BlackBerry® wireless device

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Date: Thu, 26 Jan 2012 19:00:12 +0200

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Subject: Re: [Libsa] Various