The document discusses business cycles and their causes. It notes that while fluctuations in the economy are normal, there are also patterns of general boom and bust seen in economic data. One theory presented to explain these cycles is malinvestment, where artificially low interest rates lead to investment in unprofitable production. This results in a boom as investment increases, but then a bust as these investments are liquidated due to realized losses. The structure of production and role of interest rates in production decisions are also discussed, suggesting that disruptions to interest rates can distort the economy's structure over time.
Stage Finance & Venture Debt in innovationDiogo Martins
Qual a lógica do stage financing para inovação? A maturidade da empresa e a captação de recursos com investidores. Ainda o papel da dívida como estruturação de capital.
Managing startup equity (Equity For Startups)Kesava Reddy
Among the more important decisions that an entrepreneur makes is that of raising capital. Many choices have to be made in this context: Debt versus Equity. Own funds versus Funding from outside investors and so on. These choices have long term implications for the entrepreneur as well as the start-up. Equity funding is essential for the growth of a startup. Apart from providing critical funding equity investors also often bring added value by way of connections and strategic advice.
At the same time raising equity capital means sharing control and sharing wealth with the investors in the firm. Allowing investors to engage with the management of the startup calls for a certain degree of compatibility between the investor and the management of the enterprise. Absence of such compatibility can lead to unhappy relationships between the investor and the management team.
All things considered, managing the equity of a start-up is among the most critical decisions that an entrepreneur needs to make. It involves many trade-offs on the entrepreneurial journey. Which makes Managing the Equity of A Start Up a challenge. What does dilution of equity mean? How does the arithmetic of dilution work? How does an entrepreneur decide on when to raise equity? And how much of equity to raise?
Get funded Expert Advice from the People Who KnowIntelligent_ly
When it comes to startups, SVB has been around the block. Many times. They've helped countless founders and CEOs negotiate the ups and downs of startup financing.
Confused about the how to choose the right funding strategy? Don't be.
On November 12th, SVB’s Dan Allred and Smith Anderson will break it down for you. They'll introduce five of the most important and popular avenues for startup funding:
Bootstrapping
Crowdfunding
Angel Investors
Venture Capital
Debt
Stage Finance & Venture Debt in innovationDiogo Martins
Qual a lógica do stage financing para inovação? A maturidade da empresa e a captação de recursos com investidores. Ainda o papel da dívida como estruturação de capital.
Managing startup equity (Equity For Startups)Kesava Reddy
Among the more important decisions that an entrepreneur makes is that of raising capital. Many choices have to be made in this context: Debt versus Equity. Own funds versus Funding from outside investors and so on. These choices have long term implications for the entrepreneur as well as the start-up. Equity funding is essential for the growth of a startup. Apart from providing critical funding equity investors also often bring added value by way of connections and strategic advice.
At the same time raising equity capital means sharing control and sharing wealth with the investors in the firm. Allowing investors to engage with the management of the startup calls for a certain degree of compatibility between the investor and the management of the enterprise. Absence of such compatibility can lead to unhappy relationships between the investor and the management team.
All things considered, managing the equity of a start-up is among the most critical decisions that an entrepreneur needs to make. It involves many trade-offs on the entrepreneurial journey. Which makes Managing the Equity of A Start Up a challenge. What does dilution of equity mean? How does the arithmetic of dilution work? How does an entrepreneur decide on when to raise equity? And how much of equity to raise?
Get funded Expert Advice from the People Who KnowIntelligent_ly
When it comes to startups, SVB has been around the block. Many times. They've helped countless founders and CEOs negotiate the ups and downs of startup financing.
Confused about the how to choose the right funding strategy? Don't be.
On November 12th, SVB’s Dan Allred and Smith Anderson will break it down for you. They'll introduce five of the most important and popular avenues for startup funding:
Bootstrapping
Crowdfunding
Angel Investors
Venture Capital
Debt
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...Sachintha Gunasena
This series in about the Entrepreneurial and E-Commerce opportunities and how to harness the power of Information Technology to improve or revolutionize business.
This session discusses about the options that an entrepreneur has to fund a venture, paths to expand a venture, and finally the exit strategies for a venture.
Early-stage startup fundraising overview including: types of funding, how to decide how much money you need, creating the pitch deck, negotiating valuation, and how to approach investors. Talk I gave at Founder Bootcamp at Moscow State University (innovationlabs.net)
Stanford CS 007-05 (2020): Personal Finance for Engineers / Assets & Net WorthAdam Nash
These are the slides from the 5th session of the Stanford University class, CS 007 "Personal Finance for Engineers" This seminar focuses on liquidity, emergency funds, assets & liabilities, and net worth.
So what works in seed funding and how to improve it fast?
Sign up for more our content:
http://newsletter.innovationnest.co/
Twitter: https://twitter.com/innovationnest
Facebook: https://www.facebook.com/innovationnest
YouTube: https://www.youtube.com/user/innovationnest
These are the things I learned about Angel Investing. If you're thinking about investing in startups, either directly or via services like AngelList, my hope is that these tips can help you avoid some common mistakes.
Funding Your Startup 101 - M.A. Fashion Entrepreneurship & Innovation Lecture...Nina Faulhaber
Lecture on the basics of startup financing: Reasons why, investor types, how investors and specifically VC funds like ourselves think and how to prepare a pitch. Ending with a few slides on trends in Fashion Tech.
www.thisisaday.com
How to raise capital from a Venture Capital fund, what to think about, how to approach them, what to do afterwards regardless of whether it is yes or no?
Fairshare Model presentation to Mayer Brown law firm 9.10.20Karl Sjogren
Presentation on Fairshare Model to the Capital Markets group of Mayer Brown. Mayer Brown has more than 1,500 lawyers and by revenue is the 19th largest law firm in the world. Slides added to list opportunities for clients to use Fairshare Model and major legal issues to explore.
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...Sachintha Gunasena
This series in about the Entrepreneurial and E-Commerce opportunities and how to harness the power of Information Technology to improve or revolutionize business.
This session discusses about the options that an entrepreneur has to fund a venture, paths to expand a venture, and finally the exit strategies for a venture.
Early-stage startup fundraising overview including: types of funding, how to decide how much money you need, creating the pitch deck, negotiating valuation, and how to approach investors. Talk I gave at Founder Bootcamp at Moscow State University (innovationlabs.net)
Stanford CS 007-05 (2020): Personal Finance for Engineers / Assets & Net WorthAdam Nash
These are the slides from the 5th session of the Stanford University class, CS 007 "Personal Finance for Engineers" This seminar focuses on liquidity, emergency funds, assets & liabilities, and net worth.
So what works in seed funding and how to improve it fast?
Sign up for more our content:
http://newsletter.innovationnest.co/
Twitter: https://twitter.com/innovationnest
Facebook: https://www.facebook.com/innovationnest
YouTube: https://www.youtube.com/user/innovationnest
These are the things I learned about Angel Investing. If you're thinking about investing in startups, either directly or via services like AngelList, my hope is that these tips can help you avoid some common mistakes.
Funding Your Startup 101 - M.A. Fashion Entrepreneurship & Innovation Lecture...Nina Faulhaber
Lecture on the basics of startup financing: Reasons why, investor types, how investors and specifically VC funds like ourselves think and how to prepare a pitch. Ending with a few slides on trends in Fashion Tech.
www.thisisaday.com
How to raise capital from a Venture Capital fund, what to think about, how to approach them, what to do afterwards regardless of whether it is yes or no?
Fairshare Model presentation to Mayer Brown law firm 9.10.20Karl Sjogren
Presentation on Fairshare Model to the Capital Markets group of Mayer Brown. Mayer Brown has more than 1,500 lawyers and by revenue is the 19th largest law firm in the world. Slides added to list opportunities for clients to use Fairshare Model and major legal issues to explore.
This revision presentation for business students introduces the concept of the economic cycle. GDP, consumer spending, business investment are described as are possible business strategies that are adopted during an economic downturn.
Slides from session 4 of my course in the "Design for Social Business" at Istituto Europeo di Design Milano in spring 2011. The course is experimental, started as a collaboration between IED and Grameen Creative Lab
Calculate Financial Projections for Investment PresentationsThe Capital Network
Join our experts in an overview discussion of financial projections. Learn the key metrics that will get investors to notice you, as well as those that will get you rejected. If you have no idea where to begin with your financial projections, this program is for you.
The presentation was part of the StartupGrind session taken by Mr Yogesh Pathak. he can be reached at yogesh@kartriventures.com
StartupGrind Pune sessions are https://www.startupgrind.com/pune/
Startup Basics: How to Split the Pie, Raise Money and Reward ContributorsRoger Royse
What’s my startup worth? How much equity should founders have? How much equity should I give to employees and consultants? How much should I give the VC’s?
Silicon Valley startup attorney Roger Royse of the Royse Law Firm discusses the basic valuation and ownership issues involved in a startup’s life, from formation to financing to exit, including how to value your company and the contributions of stakeholders and investors at each step with a particular emphasis on different models, best practices and traps to avoid.
Stanford CS 007-03: Personal Finance for Engineers / Getting PaidAdam Nash
These are the slides from the 3rd session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on October 10, 2017. This seminar covers compensation, equity & comparing offers.
Presentation Slides from Amuta21c: Strategies for Analyzing & Implementing Re...Shuey Fogel
Presentation Notes from a workshop given at the Amuta21c Conference in Jerusalem on March 18, 2012.
These slides are primarily intended for the workshop participants. More developed intended for a general audience are/will be posted on my Slideshare channel.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
2. Whatisa businesscycle?
• What it is not: Business fluctuations
• Changes happen all the time and are necessary for a functioning market
economy (production, consumption, preferences, resources)
• Entrepreneurs have the task of dealing with and anticipating these
changes by putting resources on the line in such a way to satisfy
consumer demands.
• Good choices mean growth, bad choices mean decline
• But, bad entrepreneurs suffer losses and good entrepreneurs gain profits
10. Whatisa businesscycle?
• General boom and general bust
• Consumer prices vs. factor prices
• Rothbard, America’s Great Depression p. 9: “capital-goods industries
fluctuate more widely than do the consumer-goods industries”
11. Whatisa businesscycle?
• General boom and general bust
• Consumer prices vs. factor prices
• Rothbard, America’s Great Depression p. 9: “capital-goods industries
fluctuate more widely than do the consumer-goods industries”
12. Whatisa businesscycle?
• General boom and general bust
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Suspects:
• Money
• Credit
13. Whatisa businesscycle?
• General boom and general bust
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Suspects:
• Money
• Credit
14. Whatisa businesscycle?
• General boom and general bust
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Suspects:
• Money
• Credit
15. Whatisa businesscycle?
• General boom and general bust
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Suspects:
• Money
• Credit
16. Whatisa businesscycle?
• General boom and general bust
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Suspects:
• Money
• Credit
• Nick Cage?
17. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
18. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
19. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
20. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
21. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
22. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
23. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
24. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
25. Malinvestment
• Investment in unprofitable lines of production induced by
artificially low interest rates
• Profits anticipated ex ante
• Profits/losses realized ex post
• Need to explain how interest rates influence production
• Good candidate because…
• Explains boom (increased investment)
• Explains bust (liquidation)
• Explains cluster of errors
• Related to money and credit
• Related to capital markets
26. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
27. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
Böhm-Bawerk
28. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
Böhm-Bawerk Hayek
29. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
Böhm-Bawerk Hayek
30. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
Böhm-Bawerk Hayek Rothbard
31. StructureofProduction
• Factors of production are employed together to make
consumer goods
• Requires laborers using land and capital
• Complex, heterogeneous, interwoven, “latticework”
• Takes time (stages)
• What does it look like?
Böhm-Bawerk Hayek Rothbard
Garrison
32. Timepreference
• We all prefer a given satisfaction sooner rather than later
• Variety of rates of time preference, and so there is an
opportunity to trade
David
$1200 F
$1000 P
$1100 F
:
$1000 F
Jeff
$1100 F
$1000 P
$1050 F
:
$1000 F
interest
rate
loans
S
D
33. Productionandtheinterestrate
• Since production takes time, the costs of production
(purchasing, renting, and hiring factors) precede revenues
from the sale of output
• Therefore anticipated future profits are compared to returns
that could be earned by lending at interest
• Suppose Nick could earn 5% interest by lending, but has an idea for a
product he thinks he could produce and sell for a 7% return.
• Nick increases his demand for factors, engages in production, and puts
his product on the market.
• No matter the outcome (profit or loss), Nick has pushed up the price of
factors because the interest rate was lower than his anticipated rate of
profit.
• What about the opposite?
34. Saving andgrowth
• We save more at a lower rate of time preference because we
discount the future less.
• When we save, a few things happen:
• First, and most obvious, we decrease consumption. Fewer resources are
consumed in the present.
• The supply of loanable funds increases. More people are willing to part
with more of their money in the present in exchange for the promise of
future returns.
• The interest rate falls, and production is restructured for longer lines of
production.
• Factor price relationships change as earlier stages see a greater increase
in demand than later stages. Late stage factor demand will decrease as
consumers consume less to save more.
35. Saving andgrowth
• We save more at a lower rate of time preference because we
discount the future less.
• When we save, a few things happen:
• First, and most obvious, we decrease consumption. Fewer resources are
consumed in the present.
• The supply of loanable funds increases. More people are willing to part
with more of their money in the present in exchange for the promise of
future returns.
• The interest rate falls, and production is restructured for longer lines of
production.
• Factor price relationships change as earlier stages see a greater increase
in demand than later stages. Late stage factor demand will decrease as
consumers consume less to save more.
36. Saving andgrowth
• We save more at a lower rate of time preference because we
discount the future less.
• When we save, a few things happen:
• First, and most obvious, we decrease consumption. Fewer resources are
consumed in the present.
• The supply of loanable funds increases. More people are willing to part
with more of their money in the present in exchange for the promise of
future returns.
• The interest rate falls, and production is restructured for longer lines of
production.
• Factor price relationships change as earlier stages see a greater increase
in demand than later stages. Late stage factor demand will decrease as
consumers consume less to save more.
37. Saving andgrowth
• We save more at a lower rate of time preference because we
discount the future less.
• When we save, a few things happen:
• First, and most obvious, we decrease consumption. Fewer resources are
consumed in the present.
• The supply of loanable funds increases. More people are willing to part
with more of their money in the present in exchange for the promise of
future returns.
• The interest rate falls, and production is restructured for longer lines of
production.
• Factor price relationships change as earlier stages see a greater increase
in demand than later stages. Late stage factor demand will decrease as
consumers consume less to save more.
38. Saving andgrowth
• We save more at a lower rate of time preference because we
discount the future less.
• When we save, a few things happen:
• First, and most obvious, we decrease consumption. Fewer resources are
consumed in the present.
• The supply of loanable funds increases. More people are willing to part
with more of their money in the present in exchange for the promise of
future returns.
• The interest rate falls, and production is restructured for longer lines of
production.
• Factor price relationships change as earlier stages see a greater increase
in demand than later stages. Late stage factor demand will decrease as
consumers consume less to save more.
40. Saving andgrowth
• Result: greater production in the long run
• Saving today frees up resources for productive uses which
yields more output tomorrow
41. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
42. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
43. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
44. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
45. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
46. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
47. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
48. Artificialcreditexpansion
• Central bank can expand credit without an economy-wide
increase in savings
• Newly created money enters the economy through credit
markets and so represent an increased supply of loanable
funds
• Interest rate falls, but not because of a decrease in time preference
• At the lower interest rate, saving decreases
• Consumption and borrowing increase
• Firms take the new funds and try to invest in new, longer lines of
production
• Factor prices are bid up across the board.Wages increase, employment
increases, consumption increases, investment spending increases.
• In short, we have a general boom.
49. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
50. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
51. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
52. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
53. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
54. Artificialcreditexpansioncauses
overconsumptionandmalinvestment
• Consumers did not show they preferred future output to
present output, in fact, they decreased saving at the lower
interest rate.
• The credit expansion does not represent an increase in real
resources available for consumption or investment.
• Factors of production become increasingly scarce
• Prices are bid up higher than entrepreneurs expected
• Costs increase: expected profits turn into losses
• Entrepreneurs were led to believe consumers had saved, real
resources were available for production, and that longer
production would be profitable.
56. Depression
• Firms attempt to liquidate malinvested capital
• Wages decrease and workers are laid off
• Credit markets dry up
• Prices readjust to reflect consumer demands
• Inputs and outputs
• Depression is a recovery phase as people try to find profitable
uses for capital and labor
57. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust
Cause Expansionary monetary policy
Cause #2 Malinvestment
Cure Markets
Cure, restated Let consumer demand dictate
prices and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
58. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy
Cause #2 Malinvestment
Cure Markets
Cure, restated Let consumer demand dictate
prices and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
59. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy Instability of investment spending
Cause #2 Malinvestment
Cure Markets
Cure, restated Let consumer demand dictate
prices and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
60. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy Instability of investment spending
Cause #2 Malinvestment Fall in aggregate demand
Cure Markets
Cure, restated Let consumer demand dictate
prices and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
61. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy Instability of investment spending
Cause #2 Malinvestment Fall in aggregate demand
Cure Markets Expansionary monetary policy and
fiscal policy
Cure, restated Let consumer demand dictate
prices and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
62. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy Instability of investment spending
Cause #2 Malinvestment Fall in aggregate demand
Cure Markets Expansionary monetary policy and
fiscal policy
Cure, restated Let consumer demand dictate
prices and resource allocation
Let the government dictate prices
and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
63. Contrasting business cycle theories
Austrian Keynesian
Shape Boom-bust Bust-boom
Cause Expansionary monetary policy Instability of investment spending
Cause #2 Malinvestment Fall in aggregate demand
Cure Markets Expansionary monetary policy and
fiscal policy
Cure, restated Let consumer demand dictate
prices and resource allocation
Let the government dictate prices
and resource allocation
Prevention Don’t give money production
authority to non-market
institutions
Give the government control of
money production and a blank
check for spending
64. Conclusion
• We can successfully explain business cycles using
malinvestment concept
• Investment in unprofitable lines of production induced by artificially low
interest rates
• Theory must account for these phenomena:
• The “shape” or stages of the cycle: boom then depression
• The cluster of entrepreneurial errors
• The more dramatic fluctuations in capital-goods industries compared to
consumer-goods industries
• Original suspects:
• Money
• Credit