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Economic Cycles (and Austrian Economics in general)

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Capitalism Forever
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As a case in point, I hold that simplified models of an economy, or a part thereof, are useful tools of abstraction and can help shed light on the essence of certain relationships and laws by focusing one's attention on just the relevant aspects--while the Austrians seem to have a distinct aversion toward such models and prefer to make their point using verbose paragraphs of often difficult-to-follow prose.

Cap, it is really much simpler than you are getting at. Economic actors face a decision between consumption now and consumption later, and as John said, this is essentially the microeconomic basis of all macroeconomic theory. The price mechanism by which these decisions are made is the relevant intertemporal rate of interest.

So far I have said nothing that is, by any means, exclusively Austrian. If you disagree with any of the above, please state what and why.

Austrian theory states that the manipulation of this price mechanism, i.e. the interest rate, by government causes what we call the modern business cycle.

If you don't agree with this, then what does government manipulation of the interest rate do, in your view?

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Austrian theory states that the manipulation of this price mechanism, i.e. the interest rate, by government causes what we call the modern business cycle.

It says more than that. It says that it is the lowering of interest rates by the government that eventually causes the bust. It is this part that I disagree with, and also with what the Austrian theory says about by what mechanism the manipulation affects the economy. Further, I do not share the widespread view that keeping interest rates low is necessarily inflationary.

But I have already stated all that in my previous posts, haven't I? And now, if you'll excuse me, I really have to focus my attention from Austrian economics to the Austrian Alps! ;)

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It says more than that. It says that it is the lowering of interest rates by the government that eventually causes the bust.

No it doesn't. You're simply wrong. It says that the lowering of interest rates by government causes the boom.

It is this part that I disagree with, and also with what the Austrian theory says about by what mechanism the manipulation affects the economy. Further, I do not share the widespread view that keeping interest rates low is necessarily inflationary.

Again, you're simply wrong. Interest rates are kept low by increasing the supply of money. In order for your statement to make sense, you would have to reject the notion that an increase in the supply of money is inflationary, which means: you would have to account for inflation by some means other than the money supply. Would you care to give us your view on the cause of inflation, without mentioning the money supply?

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