Business Cycles

The US economy is hooked on easy money and artificially low interest rates. Huge credit expansions are not “stimulating” the economy; they are destroying it.

The US economy is hooked on easy money and artificially low interest rates. Huge credit expansions are not “stimulating” the economy; they are destroying it.

Ever since the Great Depression, most economists have claimed that the key to increasing economic growth is to lower unemployment. However, increasing the savings rate and building a capital structure are the keys to growth—and lower unemployment.

Jonathan Newman joins Bob to unpack Eliezer Yudkowsky’s viral bubble theory and contrasts it with the Austrian view of boom-bust cycles.

In an attempt to explain business cycles, Milton Friedman came up with a plucked-string analogy. Like all Monetarist theories, however, this also had fatal flaws.

Paul Cwik explains how artificial credit expansion triggers unsustainable booms and inevitable busts.

A recession is defined by negative economic activity over several months with an accompanying decline in GDP. However, given the actual makeup of GDP, it is inaccurate to directly tie recessions to GDP at all.

A recession is defined by negative economic activity over several months with an accompanying decline in GDP. However, given the actual makeup of GDP, it is inaccurate to directly tie recessions to GDP at all.

William Nordhaus coined the term “Political Business Cycle” a half-century ago. The idea was that government authorities, particularly the central bank, would manipulate the economy to correspond with election cycles, a practice that continues to this day.

Carl Menger wrote, “All things are subject to the law of cause and effect.” Unfortunately, modern academic economists all too often confuse correlation of economic phenomena with causality.