Business Cycle | Cluster of Errors?

#economics #businesscycle #interest

Just as important as saying what the business cycle is, saying what it is not. It is not something determined by statistics. Statisticians will make you think economics can be determined by viewing statistics, all statistics are historical, and drawing a graph to view those statistics is pointless. In the words of Mises: graphs are for undergraduates. The business cycle is categorically different from business fluctuations. The business cycle is not caused by animal spirits, greed, or speculators—every person on earth is a speculator—unless you know someone who can predict the future. The business cycle can only be caused by artificially expanding credit.

Business fluctuations must be explained more in depth. Now, the cicada fighting equipment market probably did well recently, but we don’t want to stimulate idle cicada resources until next time they come around. A speculator is just someone who is anticipating the future. Unless you know the future, you are a speculator. They may be someone taking advantage of distortions in the market. This can lead to large profits for them. This is actually beneficial. The artificial boom would go on longer without them.

Read More: https://mrdevinney.com/business-cycle/