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Copying myself: The link between interest rates and the business cycle is a core tenet of Austrian economics. The boom bust cycle is made worse by government po
by yCombLinks 3y ago
Copying myself: The link between interest rates and the business cycle is a core tenet of Austrian economics. The boom bust cycle is made worse by government policies mispricing time preferences, ie setting the interest rate to the wrong value.
- nonethewiser 3y agoDoesnt explain how > the existence of interest is what causes ups and downs in economies You arent even making as extreme of a claim. You’re saying interest rates and business cycles are linked. Not that interest rates are what cause ups and downs in the economy. Think about it: if that were true, and we removed interest rates, the economy couldnt go down? Its an absurd claim.
- HPsquared 3y agoPerhaps a weaker statement would be "centrally planned interest rates exacerbate the business cycle".
- AnimalMuppet 3y agoCentrally managed interest rates moderate the business cycle. It's one of the key activities of a central bank. And it's easy to verify. Look at the business cycle in the US before and after the creation of the Federal Reserve, for example. Under the Fed, we had the Great Depression and 2008, and relatively mild recessions other than that. Compare that with the 19th Century.