The Austrian Business Cycle Theory Explained

[ronhelwig]

What to do? As much as possible, just stop using their money and start using gold and silver. It doesn't have to be heavy ounces, google "Shire Silver".

[MrChris4251]

@stalrunner your wrong about gold. The relation between the value of currency, in this case the u.s. dollar, and gold is different. The value of gold does not change. It is the value of the dollar that changes value in relation to gold under the gold standard. There is plenty of gold for the money of the world because gold's value can't increase or decrease.

[theredscourge]

@MrChris4251 In Ancient Rome, you could buy a fine toga and a few clothing accessories for an ounce of gold. Today, you can buy a fine suit and a few clothing accessories for an ounce of gold.

[theredscourge]

@MrChris4251 There is a way for gold's value to increase or decrease, but it is only for the population rate versus the gold production rate to become drastically different, or for people to just arbitrarily decide that there a few other things they value, so they start to value it more instead.

[Mysteryskatin]

A gold standard simply could not be used without a complete revaluation of the price of gold, which would be detrimental to the economy in itself, because there is not enough gold in the world to account for the massive international trade. The gold standard also would inhibit job growth. It simply is not the way to go in a modern economy.

[stalrunner]

@Mysteryskatin You're argument ignores the law of supply and demand. If we were to have a gold standard, the exchange could be something like 0.001 oz of gold =$1.00. The dollar would be worth about $1.50 in today's numbers. But, the plan is not to simply re-implement the gold standard for the dollar, but to legalize competing currencies, which would allow for a solution to be developed by the free market.

[Mysteryskatin]

@stalrunner The cost of gold could adjust to an acceptable point, but only AFTER it was made the standard, and it being made the standard without enough of it to cover all currency would be catastrophic. Creating an exchange rate of whatever is necessary to make the system work, simply would not work either, nor is it how a free market society would work. Competing currencies may actually be beneficial, not sure, but I think the vast majority of Americans would disagree with the idea.

[stalrunner]

@Mysteryskatin Competing currencies have been tried recently, and were successful until the government shut them down. The best example is the Liberty Dollar (Wikipedia it). If we allowed that to happen, people would choose the best alternatives. Sure, people who hang on to their Fed notes longer than others will be screwed, but it will fix our problems in the long run.

[Mysteryskatin]

@stalrunner In theory I could see it working, though I don't see it being very practical in our highly corporatized society. It's a nice idea, but lacking in practicality. It would inevitably pit states against eachother if they had competing currencies, leaving some states to prosper, while other lag behind. Even if it would be beneficial, it would not solve our economic problems.

[stalrunner]

@Mysteryskatin It wouldn't be the states competing. It would basically be a barter system (I offer you a good or service in exchange for a good or service.). Eventually, people will open up banks and print notes backed by commodities that people deposit.I guess we oughta look at how the first monetary/banking systems were developed, and it would probably happen the same way now.

[wudwudendabudd]

lmfao @ 7:21...that was probably my face when I first found that out.

[bradleyrimbleus]

@wudwudendabudd The look on the girls face = PRICELESS, fucking priceless man. 

[anyelina1111]

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[Gotred]

Aside from the initially annoying voices, I found this quite well done and informative.

[groam6666]

To be fair, all goods are manipulated by government. If you take into account tariffs and taxes, even things such as products using steel, will be higher priced. Suppose corporate tax and tariffs were zero percent, would prices for goods and services be lower, higher or the same?

They would have no choice but to head down, seeing as though new business would be able to create cheaper products than most competitors for low start up capital businesses. Other than that, thumbs up.

[god0fgod]

This is a funny way of putting it.

Something not typically explained with the usual Austrian business cycle theory is consumer credit. Easy consumer credit causes massive problems. This is fuels massive bubbles like the US housing bubble.

Easy credit (More so than their should be) to businesses or consumers will always be bad. When it is created from new reserves by central banks it acts like a subsidy creating malinvestments.

[karelyou2]

Yes, it has to be done that simple for wider public to understand. Yet it remains coherent and sound. Bravo!

[Cornampoo]

Excellent work.

I just shared it on facebook.

[johcoppola]

Wrong in the State of Maine the minimum price of MILK! is set by the State.

[ViewpointLibertarian]

Awesome job! I plan to make a video soon about why libertarians need Austrian economics and an explanation of the Austrian business cycle theory.

[SirTenenbaum]

Very good video! I would say that things like milk and other goods' prices are manipulated by the State through subsidies, tariffs, corporate welfare, among other things. But of course you couldn't get into that in the video, and it's beside the point anyway. Great explanation of the ABCT. Keep the videos coming!