Analysis of the Formation of the Super Bubble

The relentlessly expansionary monetary policy of the last 40 years has driven interest rates ever lower, producing falling debt quality, reduced economic dynamism, and declining economic performance. Traditional Austrian Business Cycle Theory might seem to predict that the system should have fallen into catastrophic collapse long ago. But the traditional theory assumes a freer market than we have had in this period. The chapter explains why there has been movement towards ever larger corporations, dependent on government bailouts and other protections from the discipline of profit and loss. While corporations are nominally private, they have become increasingly subject to governmental control, which has progressively weakened the market forces assumed in the traditional Austrian Business Cycle Theory. Economic performance steadily declines, but the game goes on.