It is interesting to see that economic theory has not experienced any evolution in its practical implementation for decades. Political processes, the attempt to buy votes with debt programs, overshadow any form of evolution in economics and prevent the application of the principles of the Austrian School of Economics, such as the free market economy, the free formation of interest rates and the private formation of capital.
What we are experiencing is interventionism on a whole new level, debt creation by states that form a Himalaya of obligations in the future, and the ongoing manipulation of interest rates in order to achieve something like a global control of liquidity and the price of money, which of course cannot succeed. The result are boom-bust cycles that leave a social swath of devastation in their wake.
Incidentally, the war economy recently called for by many politicians in the European Union, i.e. state-controlled weapons production, fits perfectly into the creation of a new boom cycle. Overcapacity is being created and products are being produced that nobody can consume, but which give the impression that the region's prosperity is on the rise.
RBC Global's latest chart now reveals the crucial change in central bank policies. It shows we clearly shifted in the liquidity regime and a change of direction as central bank liquidity is growing again. Good news for the owners of hard assets and those who survived the last hit central bankers initiated.
By mid-2024, global net tightening trends were set to turn negative. Rate cuts are already on the way and increased money printing in the year's latter half is booked, signaling a move towards Quantitative Easing (QE).
We are following the boom-bust cycle of the Austrian school in the broadest sense again.