Austrian theory of business cycle is key to explain upcoming Recession

One reason the current economic situation is so fraught is that world is facing 3 kinds of business-cycle mechanisms at the same time. First 2 are well-known, but the third - Austrian theory is not

One reason the current economic situation is so fraught is that the world is facing three kinds of business-cycle mechanisms at the same time. The first two are well-known, but the third — known as the Austrian theory of the business cycle — is not.

The first driver of this phase of the business cycle is high energy prices, and the second is the need for disinflation. Both are well-known instruments. The Austrian theory, however, involves a very different mechanism and works something like this: Investors expected that very low real interest rates would hold. They committed resources accordingly, and now