CH. 20 PURE THEORY OF THE CREDIT CYCLE 325

preneurs, to-day’s spot price for finished goods, whichis certain, has far more influence in determiningentrepreneurs’ decisions as to the rate of new inputinto the machine of process than the prospective priceat the end of the production-time, which is to themquite uncertain ; whereas it is wholly the latter priceand not at all the former which ought to influencethem. The result is that, when spot prices are rising,especially if they have been rising steadily for some sixmonths, the rate of input is unduly accelerated, and ifthey have been falling it is unduly retarded—withobvious subsequent consequences.

Moreover, where there are a number of entre-preneurs making independent decisions, which theytake pains to conceal from one another, involving anincreased rate of input, it is quite impossible for anyof them to foresee with accuracy the increased rate ofoutput, and consequently the reaction on prices by thetime that one production-period has passed by.

Evidently the possible ramifications and extensionsof the foregoing argument are so numerous that onecould continue for many more pages amplifying, quali-fying and generalising it. Perhaps, however, it hasbeen carried far enough to enable a reader, who hasentered into the general system of thought hereexemplified, to apply it for himself to any furtherinteresting cases which may occur to him.