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    Huerta de Soto 6: ‘The crack-up boom’

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    GoldMoney

    by GoldMoney

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    Watch the whole 1:06 minute presentation at http://www.goldmoney.com/huerta-de-soto-presentation. In this sixth video, Jesús Huerta de Soto, Professor of Political Economy at Rey Juan Carlos University, Madrid, (http://www.urjc.es/) lists the six microeconomic effects that result in the crack-up boom. Crucially, credit expansion leads over-investment in capital goods. The credit expansion leads to first rising prices and then higher interest rates, and thus lower prices for capital goods. There are not enough real savings to support the demand for the increased number of capital goods, leading to recession.