Sergio1

Sérgio Alberich is President and Executive Director of Mises Brasil.

In Support of the Austrian Business Cycle Theory

Since the introduction in 1912 of Ludwig von Mises’s Austrian business cycle theory (ABCT) in his book The Theory of Money and Credit, it has been subject to relentless criticism. According to the ABCT, the artificial lowering of interest rates by the central bank via inflationary credit expansion leads to a misallocation of resources on account of the fact that businesses undertake various capital projects that, prior to the lowering of interest rates, weren’t considered profitable.