Reply To: Overinvestment

#18473
jmherbener
Participant

Over-investment theories claim that during the boom total spending in the economy shifts away from consumption and toward investment. The ABCT argues that monetary inflation and credit expansion suppress interest rates which leads to more consumption and a shift of investment into longer production processes, which eventually prove to be unprofitable.

Take a look at the article by Joe Salerno:

http://mises.org/journals/qjae/pdf/qjae15_1_1.pdf