There are those, especially in Australia, who sneer at the Austrian emphasis on malinvestments, even going so far as to state that there is no such thing. The Austrian argument is basically simple. Inflation screws up the economic works by distorting price signals which then misdirects or, if you like, distorts production. This could have been written by an Austrian but wasn t, unfortunately. Despite some of the writer s gross errors he had hit upon a fundamental economic truth.
Inflation dislocates production.