In this series of posts, I'm going to go backwards. Instead of posting an exposition of Austrian Business Cycle Theory (ABCT) and gradually working up the explanation so that the graph is understandable in context, I'm going to start directly with the graph and work backwards to explain what it means and how it demonstrates the ABCT in action. When I first saw the explanation, being deeply into ABCT, I was quite taken with it.
By getting the graph before the explanation, it is a little like eating dessert first.
First, I will ask you to not worry about what the graph represents. That will come later. For now, simply observe the graph carefully. Notice how very well a dip (downturn) in the graph matches up with official recession periods marked as grey areas.
Take your time and really check this out. While not every dip in the graph corresponds to a recession, I think that every recession corresponds to a dip in the graph. For this post, that is enough. Observe it.
More to come, but please take to time to see this correlation before proceeding. It will help it all sink in.
By getting the graph before the explanation, it is a little like eating dessert first.
First, I will ask you to not worry about what the graph represents. That will come later. For now, simply observe the graph carefully. Notice how very well a dip (downturn) in the graph matches up with official recession periods marked as grey areas.
Take your time and really check this out. While not every dip in the graph corresponds to a recession, I think that every recession corresponds to a dip in the graph. For this post, that is enough. Observe it.
More to come, but please take to time to see this correlation before proceeding. It will help it all sink in.
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