Okay, suppose people hadn't paid $100 a share for e-Toys and Worldcom. What else would they have done with their money?


They could have gone out to dinner more, it could have been allocated to raise fattier cows. In which case, it would be gone.


They could have invested it in Coke and GE at 200 times earnings. But then what about the person they bought from, or outbid?


That person would still have money - meaning excess claims on short-term goods. Meaning, there would still be goods.


So, if that person then saves his money, what happens to the excess goods it is a claim on? Or if the bank lends it?


No matter how you cut it, it is very difficult to take goods existing in 1999, and somehow make them last, and available in 2005.


Really, the best thing people could do with their goods, seeing as they wanted them in 2005 not 1999, was take a gamble.


If you are going to the Moon (retirement), and you need food, you need to buy refrigerators. As many as possible.


Any incremental refrigerator is good. If you run out of good refrigerators, you'll start taking crappy refrigerators.


Meaning, your choice is not between making good investments and bad investments, but between good investments and no investments.


Granted, people went out to dinner more precisely because they thought they had huge refrigerators full of food, sure.


But if you had told people you can A) make this money disapper today, or B) gamble to get some back, they'd gamble!


If there had not been a speculative-investment binge, there would have been a consumption binge, so what, gone is gone.


eLROY