>ah, but does it secretly influence you?
Well if I told you it wouldn't be a secret anymore ....
I like Prechter because he's sort of like the Robert Anton Wilson of finance ... the wave pattern analysis is lacking in any obvious fundamental rationale and trying to fit every single market movement into a consistent wave count is clearly crazy. But if you have a short attention span like me then your eyes just sort of glaze over when he starts talking about "this is clearly a corrective phase B of the Grand Supercyle" or some such and read the funny bits in between, in which case it's quite good. I do like the way that the Elliott Wave crowd emphasise the role of pure animal spirits; for example, I think they're dead on the money in pointing out that the current wave of corporate governance scandals is a consequence, not a cause of the current bear market (the order of causation would be 1. the market burnt itself out for no obvious reason 2. Sentiment turned against the dot com companies 3. Reasons to hate the dot com bosses were found). But as I say, I'd never ask anyone to put their money up on the basis of all this ... I did make a successful bet on France in the 1998 World Cup on the basis of Elliott Wave theory (having observed that the Paris Bourse was on a flier, I guessed that popular sentiment would carry the team to victory).
Meanwhile, Brad is trying to defend the party line on capital theory ....
>Of course, there are similar problems in garden-variety >consumer
>demand theory: Giffen goods, where (over some range) >demand increases
>as the price rises.
Brad, mate, _give_up_ on this line of defence; it's not even a coherent analogy. There is *no* problem of Giffen goods in consumer demand theory. The possible existence of Giffen goods is *predicted* by the standard model of consumer demand theory, and there is a perfectly simple way of modelling demand for a Giffen good under the standard model. Giffen goods do *not* attack the fundamental mathematical underpinnings of consumer demand theory.
There's a whole different leap to the point about reswitching. If reswitchings are even *possible* (and it is fairly settled ground that they are), then, at a mathematical level, models of production which depend on aggregating capital are inconsistent. Bertrand Russell and Kurt Goedel did bloody hard work in the last century proving that logical inconsistencies in a mathematical argument can't be "quarantined" in the way you seem to suggest they can. The original point of my short weblog post was to show that the Cambridge argument against aggregative models of capital did *not* depend on reswitching. The position that the key question relates to empirical existence of reswitchings is ground that has been abandoned by even Paul bleeding Samuelson.
>In such situations, the claim that lower interest rates >trigger
>shifts to more capital-intensive production processes is >incoherent...
No, and if you had your maths head on you'd realise that this can't be right. What the argument is, is that *because of the theoretical consistency of those situations*, the claim that lower interest rates trigger shifts to more capital-intensive production processes is *always* incoherent.
dd
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