I’ve read and commented on this a while before, but not at this blog. Roger Garrison discusses Milton Friedman’s “plucking model” of booms & busts here. The Austrians generally claim that busts are caused by artificial booms, and that trying to prop one up through monetary policy just ensures a worse crash will eventually occur (the obvious strategy might then be to constantly inject more money to avoid ever experiencing a recession like Australia, which leads us to the accelerationist controversy). If that causality were correct, I’d expect that looking at a preceding boom would tell you about the subsequent bust. But the plucking model reverses that and says busts look more like the mirror image of the following boom. As Garrison acknowledges, that seems to match the facts. I’ve heard some Austrians claim that ABCT is not a general theory of all recessions but only some particular ones. Those more knowledgeable about Austrian economics (of which there appears to be no shortage on the internet) are welcome to enlighten me in the comments.
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