Austrian Economists

Transcript

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Austrian economists argue that business cycles are direct cause of excessive credit flow into the market, which is facilitated by an intentionally low interest rate set by the government. The supply of credit gives the false impression that money originally saved for investment has increased and the pool of investible funds is bigger. So what do the entrepreneurs do the investing projects they originally could not afford to finance? This leads to unsustainable growth because investments are higher than they would be if the market would be in balance. The illusion lies in the mis allocation of investments. Orm al investment.