A common view is the bust is caused by various mysterious factors that have nothing to do with the previous boom. But that the main problem with Friedman’s model is the lack of a coherent definition of what a boom-bust cycle really is.
The fewer non-productive bubble activities we have, the better it is for those activities that actually crate wealth. But attempts to reverse deflation with new money creation only create new bubbles.
When entrepreneurs create profit, we know they are using resources in a way that benefit others. When entrepreneurs causes losses, they are destroying wealth.
Workers get paid now, but the capitalists only get paid if there is a profit. This is why workers aren't paid 100 percent of the value of their output. For them, there is far less risk than for the capitalist.
Some people — including Donald Trump — think the dollar is too strong, and many propose the creation of a new version of the Plaza Accord, i.e., a multilateral agreement that includescoordinated intervention in foreign exchange markets.
A major factor that can explain the apparent contradiction between weakening so-called fundamentals of today — and the stock market's continued march upward — is changes in monetary liquidity.
