Recessions are the natural result of credit expansions

Posted on: September 23, 2019 at 13:00:10 CT

and manipulation of the interest rates by the central bank. When interest rates are lowered artificially, through expansion of the money supply, investment that would be deemed unprofitable, or otherwise postponed, can be undertaken[4]. This leads to bubbles in various sectors of the economy, such as the Dot-com bubble in the early 2000s, and in housing immediately following. This malinvestment must eventually be corrected by allowing the recession to run its course, thereby eliminating bad debt, and realigning the capital structure. For a more thorough explanation, see the Austrian Business Cycle Theory.

https://wiki.mises.org/wiki/Recession

[4.] No, the Free Market Did Not Cause the Financial Crisis – Thomas E. Woods, Jr.

Edited by pickle at 13:01:05 on 09/23/19