Fritz Machlup - Can We Control the Boom

8/9/2019 Fritz Machlup - Can We Control the Boom

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Can We Conthe Boom?


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PRESIDENT COFFMAN:This discussion will be continued by Dr. F

of economics at the University of Buffalo, asity of Vienna, and a writer of eminence onparticularly of monetary theory and businessDR. FRITZ MACHLUP:l\1R. CHAffiMAN, LADIES, AND GENTLEME

boom? This is really a complex of many quessee the implications of our problem more cleato ask first these three questions:1. Do we know what a boom is and can we

situation as a boom?2. If we know what a boom is and if we k

do we know how it might be controlled?


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CAN WE CONTROL THThe predicament would be, again by fo

never identify a boom before it was too lateit only by the collapse. Now that won't doomist who answers, when asked whether w"Wait a year or two. Should you see a breahealthy boom; should everything be all rirecovery."We had better give up a definition thatsituation only afterward, when it has passe

a boom as a spectacular rise in business ac


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CAN WE CONTROL THE

called optimistic because they hold that ceour financial institutions and certain avoidabations are to be blamed for the collapse frbusiness had been carried in the boom. Thata control which does not aim at avoiding theboom, but in a control which avoids a fall froThe pessimistic theories do not find that atakes, but developments inherent in too rapiare the cause of the collapse. The control rechave the function of avoiding the boom, of s


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CAN WE CONTROL THwage rates, however. The total real incomusually rise, if real-wage rates are reduced.the individual worker may rise also if, conrates, part-time jobs become full-time jobfamilies may rise if, consequent upon a fallmembers of a family find employment. Awhole labor class may rise, not only in recommodity prices, but also in terms of mment is relatively greater than the reductio


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CAN WE CONTROL THE

I have to explain this principle of acceleratthat a thousand locomotives are needed to hantraffic. Fifty locomotives a year are brought tShould the traffic increase by 10 per cent, atives would be needed, so that a hundred andof fifty have to be ordered. Thus a 10 per cfor transportation has caused a 200 per centlocomotives. The increased demand for locoman increased investment demand of the locomon and so forth. But bear in mind that the


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CAN WE CONTROL TOptimists are inclined to dispose of b

capital? Rising interest rates? Let theinconvenient situation. The Reserve banmoney and to furnish the banks withexpansion. Dwindling investments by prernment take care of this. There are enoundertaken. Public investment can fill thment.


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CAN WE CONTROL THlonger than a buoyant boom, is likely to beback than the boom.This seems, then, to be the real meaningto slow down expansion to a most modest pavoiding a setback, but of making it less vioin this sense, but only in this sense, I venturmy three leading questions with "yes!" Yemight be controlled. Now we may proceedasks whether we are able to carry out the m


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CAN WE CONTROLbonds in order to support the market fonew bonds which the government issuesdeficit. As long as the government has athe Federal Reserve banks have to suppchases, no control can be effective. Thmight do something toward controllingapply our knowledge at the time being.

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Fritz Machlup - Can We Control the Boom