Austrian Business Cycle Theory: Are 100 Percent Reserves Sufficient to Prevent a Business Cycle?
We have seen that the time dimension of savings is essential to understanding the business cycle. This dimension can vary and have effects on the structure of production. Entrepreneurs can anticipate future decreases in time-preference rates and the roll-over of short-term savings. In a free market, the inherent risk of this practice will have customers striving for safety and competition putting harsh limits on maturity mismatching.