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RE: The Business Cycle And Why The Great Reset Will Fail

in LeoFinancelast year

Nice article. I'm a proponent of the Austrian Business Cycle Theory (ABCT). In short, as banks lend money/credit into existence, it becomes disconnected from the real-world goods it represents (lumber, bricks, steel, etc.). This levers up the entire economy and makes many of our (flawed) metrics like GDP look 'hot.' However, the reality of scarce goods eventually re-asserts itself, and the leverage unwinds.

If it takes 10,000 bricks to build a house and you loan a builder 10,000 bricks, he'll always be able to build the house. If you instead loan him money to buy the bricks, he may discover halfway through the project that he can't buy any more bricks (shortages).