Quarterly Journal of Austrian Economics

Volume 11, No. 2 (2008)

Keynes's presentation of our rates of interest on wheat and housing is set within Austrian business cycle theory, to show that soaring wheat prices and subprime mortgage write-downs are expected, when a monetary authority holds interest rates too low for too long. From that basis, further interest rate cuts are an unlikely remedy for a recession whose roots lie in a proliferation of credit.