The Austrian Business Cycle theory aims to explain booms and busts through artificial credit expansion. According to the theory, economic boom and bust cycles aren’t due to flaws of the free market or natural occurrences but caused by artificially low interest rates. The theory originates from the Austrian school of economics.
Fractional reserve banking is a banking system in which banks only keep a small percentage of deposits on hand. The rest of the money is lent out. Under a fractional reserve banking system, banks expand the money supply with each new loan. This provides the economy with money.
The federal funds rate, sometimes called fed funds rate, is the target interest rate at which banks provide overnight loans to each other. It is one of the main tools used by the Federal Reserve to conduct monetary policy. By controlling the federal funds rate, the Federal Reserve is able to influence the money supply.
There has been growing concern about the sustainability of sovereign debt in the United States and around the world. While the United States has never directly defaulted on its debt, many people are wondering whether a US debt default might be on the horizon.