Booms and Busts

Richard Vague's new book on financial crises repeats many old myths about economic booms, while failing to understand the role of malinvestment and central banks.

Business owners have always made errors, and external factors can lead to economic crises of various sorts. But the cyclical pattern of booms and busts we now see are a result of government interventions not seen in a free marketplace.

Whiskey production depends on investment in highly specific capital, and it requires a long time horizon. It's a textbook case of the sort of industry that's likely to suffer most in case of an economic bust.

While much of the media remains focused on Trump and trade, the greatest threat to the Chinese economy may be reckoning with a massive financial bubble from within.

The main indicators of the economic cycle point to a possible crisis and recession in the US economy. and maybe also in Europe.

The negative consequences of expansionary monetary policies take a while to show up, but Deutsche Bank's collapse may be the first sign of failure. 

Even if business people learn to expect easy-money caused bubbles and busts — this would still not prevent the formation of a boom-bust cycle. 

Presented at Mises University 2019.

Inflation can always give only a temporary fillip to the economy, and will leave us with a legacy of postponed adjustments and new maladjustments which make our problem more difficult.

The “boom-bust” cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.