Apple surpassed Microsoft today as the most valuable technology company with a market cap of $223 billion.
While the valuations of Apple and Microsoft are the result of many complex factors, it should not go unnoticed that Apple products tend to be aimed more at the consumer market, e.g., the ipod, the iphone etc., while Microsoft tends to have an aim more at the business market (not exclusively but more of a tendency).
ABCT teaches, of course, that the downturn phase of the business cycle is a re-adjustment toward the consumer sector of the economy away from the central bank manipulated push of funds towards the capital goods sector (generally the business sector). Thus, in this sense, the advance of Apple over Microsoft should not come as a surprise.
Although it is only one data point, doesn't this suggest that the economy is moving along the boom/bust cycle as expected by ABCT? And that the recovery is not completely manipulated by the central bankers?
ReplyDeleteThe boom part, the Alan Greenspan printing was all manipulated. For whatever reason, in my view, except for the money burst, between Sept. 2008 and March 20o9, Bernanke is doing exactly what Austrians would prescribe, keeping the money supply flat.
ReplyDeleteI don't expect this to continue as the intensity of the downturn increases (and especially because of the accompanying debt problems the Treasury will face), but for now he's acting like an Austrian--and there is no central bank manipulation in the important sense of money growth.
Efinancial,
ReplyDeleteThe involvement of the central planners in the "recovery" has been all about the illusion of such via continued manipulations of the financial markets. If you think about it, there has been very little New Deal-style direct subsidy/intervention in the larger economy as a whole (the ARRA of 2009, notwithstanding, though even there much of the money has supposedly not been disbursed and what little has has been boondoggled big time).
I've explored this idea further in one of my first posts, The Macro-Managed Economic Recovery.
Just wondering. Is it possible that when Mises, Hayek, and others developed ABCT, the reason funds were pushed more towards the business sector of the economy during the boom phase was because credit tended to be something extended more to businesses than to consumers?
ReplyDeleteIn modern times, with the ubiquity of credit cards and all kinds of other consumer debt vehicles, would we expect the same effect? I think the underlying principles are still true, but the effects might be different because of the rise in consumer credit in general.
I also think the Apple versus Microsoft market cap has little to do with ABCT. It has a lot more to do with Apple's innovation and execution.
It's the shiny new thing and people to stupid to understand IT effect we've seen in 2000.
ReplyDeleteIf it's blinking moving and making sounds it has to be good, right ?
But give those customers two month and they will reconsider the 200 bucks "buy into our nice world and become as cool as steve" premium.