Abraham, Jesse M., and Patric H. Hendershott. 1994. “Bubbles in Metropolitan Housing Prices.” NBER Working Paper 4774. National Bureau of Economic Research. Cambridge, MA.

Ali, M., and Kyoung Sun Moon. 2007. “Structural Developments in Tall Building: Current Trends and Future Prospects.” Architectural Science Review 50, no. 3.

Alonzo, William. 1964. Location and Land Use: Toward a General Theory of Land Rent. Cambridge, MA: Harvard University Press.

To reiterate, the Austrian business cycle theory (ABCT) shows that artificially low interest rates produce systematic distortions in the economy. The most important of these distortions is the inducement to build longer structures of production and more roundabout production processes involving advanced or premature technologies. It is during the resulting boom when all the mistakes or malinvestments occur in a temporal cluster. The bust or economic crisis is when these errors are later revealed.

What this book has established is that the central bank causes a variety of economic problems and that Austrian business cycle theory (ABCT) shines a scientific light on what otherwise is a highly complex phenomenon. I have shown that the Skyscraper Index has predicted most of the important economic crises for over a century. I have also shown that Austrian economists have predicted those crises using ABCT.

[The original version of this chapter was published  as “Is the Housing Bubble Popping?” LewRockwell.com, August 8, 2005.]

Friday, August 5, 2005, was a bad day for housing stocks and this could be a sign that the housing bubble may have sprung its first leak. This is what the Philadelphia Stock Exchange Housing Sector Index looked like this week — losing about 5 percent for the week.

In 2010, I argued in “America’s Second Great Depression”1 that the US economy was in an economic depression and that it would likely continue for some time until economic policy was reversed. This was one of six papers organized as a symposium in honor of the late Larry Sechrest at the Southern Economic Association’s 2009 convention.

In 1993, Milton Friedman proposed his famous “plucking model”1 of the business cycle. To understand this theory, imagine a string or straight rising line on a graph that represents the potential growth of the economy.

[The original version of this chapter was published as “Housing: Too Good to Be True,” Mises Daily, June 4, 2004.]

[This chapter originally appeared as “The Economics of Housing Bubbles,” in Housing America: Building Out of a Crisis, edited by Randall G. Holcombe and Benjamin Powell (New Brunswick, NJ: Transactions Publishers, 2009), pp. 237–62. Reprinted with permission from the publisher.]

It was on a weekend during the winter of 2004 and I was getting suspicions of the coming of another Fed-induced bubble like the one of the late 1990s. Social psychology seemed to be becoming more optimistic. However, it was not perfectly clear if it was just a general boom throughout the economy, or a bubble in a particular sector. I decided to take a look for myself.