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2018-11-10

But like Mises said – it’s not the boom that matters (from lowering rates). It’s the bust that will follow (from raising rates).

As a firm believer in the Austrian Business Cycle Theory – first drafted by Ludwig Von Mises in early 1900’s – I believe that artificially moving interest rates away from the markets natural rate is opening Pandora’s box.

Sure – lowering rates across the yield curve is good for stimulating the economy.  And like John Maynard Keynes explained, it’s a good tool for ‘papering over’ a slowdown – a quick fix.

But like Mises said – it’s not the boom that matters (from lowering rates). It’s the bust that will follow (from raising rates).

Suddenly and artificially raising short-term rates – which the Fed does when they hike – disrupts the current equilibrium.

Palisade Research  via Zerohedge 11/09/2018  



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