6. Simple as ABC – the Austrian Business Cycle

AustriaThe Austrian economists showed that when banks created credit from nothing, and lent it out, they caused business people and entrepreneurs to form incorrect judgements about the economy, and led them to make bad investment decisions.

This created the boom effect we like, and also caused the bust, which we don’t like.

Eventually, if the banks don’t stop issuing this credit, this boom/bust economy has a final disastrous manic boom, followed by the final bust.

The USA seems to be approaching this final bust.