Gold Silver Worlds | June 4, 2014
The newest publication from Global Gold Switzerland “The Clean Slate” focuses on the theory and practice of economic cycles. In just 12 pages (download pdf), the “Austrian Business Cycle Theory” (ABCT) is explained in a simple and accessible way. Subscribe here to receive similar updates in the future via e-mail.
The key of the ABCT is that economies operate in cycles, they go through ‘booms’ and ‘busts’, ‘expansions’ and ‘recessions.’ A ‘crisis’ should not come as a surprise. Austrian School economists argue that central banks don’t help in smoothing the amplitude of the cycles, but are actually the root cause of the business cycle. While some may view that the expansionary monetary policy can mitigate the adverse effects of a crisis, the Austrian School begs to differ.
The paper does an outstanding job in explaining the ABCT and applying it on the major business cycles of the modern US economy. It also answers the question whether we have seen the end of the current crisis (“bust”). Although Barack Obama believes that “we have cleared away the rubble from the financial crisis and begun to lay a new foundation for stronger, more durable economic growth”, this report will tell you otherwise.
The Austrian Business Cycle Theory
Mises and Hayek believed that business cycles are a direct cause of excessive credit flow into the market,
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The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?
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