'Booms' inevitably lead to busts

Kamloops Daily News
February 25, 2013 01:00 AM

The false prosperity in boom years has led to mistakes in judgment about the kinds of skills that would be needed in our economy in the future.

Money has been spent on university educations that have produced graduates with skills for which there turns out to be no demand.

Similarly, many of our brightest minds have been attracted to the financial sector by the high incomes earned there in past boom years.

The source of these problems is the boom in all sectors of the economy that has been produced by a too large expansion of the money supply in past decades.

An inflationary expansion of the money supply produces a boom which leads inevitably to a bust. Attempts to grow the economy at rates which are not achievablemeans that projects which are started are physicallyimpossible to complete. The boom produces a bust.

RICHARD HOLMES

Kamloops


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