# Austrian Business Cycle Theory Summary::Monetary expansion leads to booms followed by busts. # Links [[Austrian Business Cycle - Garrison]] [[Austrian Business Cycle Theory - Rothbard]] [[Austrian Business Cycle Theory Reformulated]] [[Does the Boom-Bust Cycle Ever Result from Commodity Money]] [[Austrian Business Cycle Theory - A Critique]] [[Austrian Theory of the Business Cycle David Howden]] > [!Info]- Ignore dataview >## Backlink >Ignore this dataview. Plugins don't work on the website >```dataview Table Status, type as "Type" from [[]] and !outgoing([[]]) sort file.name asc >``` **Austrian Business Cycle Theory** Tuesday, December 28, 2010 4:52 AM Research the original development of the theory. Was the focus on interest rates? [Austrian Business Cycle Theory: A Brief Explanation](Austrian%20Business%20Cycle%20Theory%20A%20Brief%20Explanation.md) [Understanding the Austrian Theory of the Business Cycle](Understanding%20the%20Austrian%20Theory%20of%20the%20Business%20Cycle.md) # Austrian Business Cycle Theory The Austrian business cycle theory explains the distorting effects of artificial changes in the money supply on the information included in market prices. When the money supply expands, those who first receive that money will tend to bid up the prices on the goods and services they purchase. These increased prices will give the false impression to the market the demand is stronger than it is in fact. When entrepreneurs get this information, they tend to expand production beyond the level that would result from real demand. I get the impression that many people that advocate for the principles and theories espoused by Austrian economics believe that the business cycle is influenced primarily by the change in interest rates. This analysis, I believe, is incomplete. By bidding up the price of future dollars (which will have less value than current dollars) lenders will indirectly drive interest rates higher. [I need to work on making this explanation a bit more concise and clear.] See the original version in the Zettlekasten under Austrian Business Cycle Theory. ![[Austrian Business Cycle Theory 1.png]] ![[Attachments/Austrian Business Cycle Theory 2.png]] ![[Austrian Business Cycle Theory.png]] # Austrian Business Cycle Theory I mention the Austrian Business Cycle Theory only to alert you to later discussions of how changes in the quantity of money affect money prices and, thereby, market decisions. # Links > [!Info]- Ignore dataview >## Backlink >Ignore this dataview. Plugins don't work on the website >```dataview Table Status, type as "Type" from [[]] and !outgoing([[]]) sort file.name asc >```