Developed in the earlier part of the century, the standard exposition implicitly assumes that most large- scale borrowing is done by producers, not consumers. The former thus got the first, most beneficial use of the inflationary influx (spending the money before prices rose) and they could bid resources away from the latter as a result of this legalised fraud.
This has had to be modified slightly to take account of today’s institutional framework where the consumer is a major borrowing force also, but the principles have not been challenged by this expanded scenario.
I do not see the statement as conflicting with the ABCT. The ABCT is concerned with the price signals the newly created money and/or credit provides to entrepreneurs about the amount of current savings. It is these signals that entrepreneurs use to allocate scarce resources to future projects. These projects tend to be longer term in nature. It is these allocations to appear to others in the economy as a boom period which will inevitably be followed by a bust.
Now with more money going from banks to consumers instead of going from banks directly to entrepreneurs, this allocation of new money and credit may change the industries where the boom takes places but it still signals entrepreneurs that there is more savings than is really available. And these entrepreneurs take only long term projects like building automotove or housing projects. These activities looked like a boom but when the real preferences of bankers, consumers and entrepreneurs became known there was a huge bust that continues today.
Seems like he’s dead on correct, look at the housing crisis. Sure, they invested more and produced more in that industry than they should have, but people also bought more. And not just houses, but clothing, flat screen TVs, pasta boats, whatever. That consumers can borrow more easily these days and are a force on par with producers just means consumers themselves are more likely to find themselves in a hole due to malpurchases as entrepreneurs from malinvestments.
The quote is simply not correct. Producers do not bid away resources from consumers according to ABCT. They bid away from other producers of lower order. Consumption typically also rises due to the lower interest (and disincentive to save) resulting in what Garrison described as a “tug of war” over resources. Eventually, the bust and the recession resolve this conflict.
Mises was explicit about the consumption boom as part of the overall boom. So was Hayek, and so was every subsequent Austrian economist.