“With the recent financial crisis macroeconomic issues are receiving more and more attention. Inflation is one of those issues. Many claim inflation to be the cause of the crisis; which has even given the Austrian business cycle theory attention from the media. The theory states that an increase in the money supply causes a false appearance of savings and thus investment. This leads to mal-investment in certain industries, in the recent crisis it would be the housing market, eventually popping the bubble leading to a recession while the market reallocates resources to their truly valued ends.” Read more.
Nicholas Snow
From the Archives, July 30, 2010.
Via the Foundation for Economic Education.
