The Austrian Theory of the Business Cycle
Patrick Newman lays out the Austrian theory of the business cycle—one of the school's signature contributions. He first shows how genuine savings drives sustainable growth by lengthening the structure of production, then explains how central-bank credit expansion counterfeits that process: pushing interest rates below their natural level sends a false signal, luring entrepreneurs into long-term investments that real resources can't sustain. The result is a boom that must end in either a cleansing bust or runaway inflation—and, Dr. Newman argues, a modern policy of propping up the…
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