I am guilty of asking Perelman to give us his alternative to regaining
prosperity, so I suppose I must respond to Leeson, although otherwise I
would not, for I was trying to stir up Perelman, and Leeson's concerns are
far afield from mine. To me, the essence of financial folly is a high and
rising ratio of price to income, especially in land markets (broadly
construed). You could also call this quality of credit, for they go
together. I favor selective credit controls, which Friedman, and before him
Mints, told us were the essence of statist tyranny.

As for the flow of savings into income-creating investments, I see the
liquidity crisis of today as resulting more from the slow recovery of
existing capital from what Austrians in their private language insist on
calling "higher-order" capital goods. I spell this out in After the Crash,
2009, Wiley-Blackwell - a book that MacKenzie evidently thinks was never
written, when he says the burden of proof is on me and Foldvary, based on
his simply opining that Foldvary and I are wrong.

Mason Gaffney
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