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Isn't this exactly what austrian business cycle theory predicts? >According to the theory, the business cycle unfolds in the following way: low interest rates

Isn't this exactly what austrian business cycle theory predicts? >According to the theory, the business cycle unfolds in the following way: low interest rates tend to stimulate borrowing, which lead to an increase in capital spending funded by newly issued bank credit. Proponents hold that a credit-sourced boom results in widespread malinvestment. A correction or credit crunch, commonly called a "recession" or "bust", occurs when the credit creation has run its course. The money supply then contracts (or its growth slows), causing a curative recession and eventually allowing resources to be reallocated back towards their former uses.

zrn900 3y ago
> Isn't this exactly what austrian business cycle theory predicts? Not exactly. That theory relies on actual economic theories that were conceived for normal situations. (and even at that, most of the economics logic is still based on just guesses and truisms). But the dollar situation was far beyond anything anyone could imagine: The US kept forcing the dollar to be used in foreign trade, making the dollar de facto reserve currency. This meant that ANY kind of economic activity anywhere in the world was already monetized by the US through the dollar. Random country A prospers, the US prints dollars without suffering inflation thanks to the dollars that was being used in global trade. So in a way, the US was literally monetizing the entire world whether the rest of the world wanted it or not. Its an incredible paradigm that was not seen before. The overbloated US military existed for that purpose: To bash the heads of small countries that dared dump the dollar - Iraq, Libya et al are examples of this. Saddam started using Eu to sell Iraqi oil, Gaddafi was talking about doing either that or creating an African currency. It worked for a long while. But what the US did at the start of the Ukraine war ended this paradigm. Seeing how Russia, a superpower, got their dollar holdings stolen by the US made all countries think that nobody would be safe as long as they relied exclusively on the dollar: One foreign policy dispute one day and boom. So they started dumping the dollar and moving to their own currencies or Yuan. And the incredible and never-before-seen paradigm of a country being able to monetize the entire world ended. The sanctions and the theft of Russian assets were the dumbest things that the US elite in control of their administration did in its history. They even went after the assets of individual Russians who weren't even close to the Russian government and its governing elite - which immediately told every single rich person in the world that they would never be safe with the dollar regardless of their political positions and affiliations. So the dollar exodus started. Among other dumb things that the US elites did in recent years is banning China from certain technology products and literally pushing them to develop their competitors - without China having to break WTO rules too, as they were banned from buying those products legitimately. With a governing elite like that, the US does not need an enemy.

zrn900 3y ago

> Isn't this exactly what austrian business cycle theory predicts? Not exactly. That theory relies on actual economic theories that were conceived for normal situations. (and even at that, most of the economics logic is still based on just guesses and truisms). But the dollar situation was far beyond anything anyone could imagine: The US kept forcing the dollar to be used in foreign trade, making the dollar de facto reserve currency. This meant that ANY kind of economic activity anywhere in the world was already monetized by the US through the dollar. Random country A prospers, the US prints dollars without suffering inflation thanks to the dollars that was being used in global trade. So in a way, the US was literally monetizing the entire world whether the rest of the world wanted it or not. Its an incredible paradigm that was not seen before. The overbloated US military existed for that purpose: To bash the heads of small countries that dared dump the dollar - Iraq, Libya et al are examples of this. Saddam started using Eu to sell Iraqi oil, Gaddafi was talking about doing either that or creating an African currency. It worked for a long while. But what the US did at the start of the Ukraine war ended this paradigm. Seeing how Russia, a superpower, got their dollar holdings stolen by the US made all countries think that nobody would be safe as long as they relied exclusively on the dollar: One foreign policy dispute one day and boom. So they started dumping the dollar and moving to their own currencies or Yuan. And the incredible and never-before-seen paradigm of a country being able to monetize the entire world ended. The sanctions and the theft of Russian assets were the dumbest things that the US elite in control of their administration did in its history. They even went after the assets of individual Russians who weren't even close to the Russian government and its governing elite - which immediately told every single rich person in the world that they would never be safe with the dollar regardless of their political positions and affiliations. So the dollar exodus started. Among other dumb things that the US elites did in recent years is banning China from certain technology products and literally pushing them to develop their competitors - without China having to break WTO rules too, as they were banned from buying those products legitimately. With a governing elite like that, the US does not need an enemy.