I don't want to be a Chicken Little proclaiming that, "the sky is falling!" However, a student of the Austrian Business Cycle Theory gets a bit jumpy whenever everyone is proclaiming how we are in the midst of an economic boom. We just saw the collapse of a cryptocurrency bubble fueled by speculation and hype without real fundamental support. Right now, Donald Trump is claiming his policies are responsible for the positive economic outcomes in the past year, and we face three serious questions about the broader economy:

1. Are we in a period of sustainable economic growth, or a bubble economy supported by easy credit rather than real savings and production?

2. Will the free market be blamed the next time the house of cards collapses?

3. What should be done to insure your own financial security regardless of what happens?

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1. Is it a bubble?

I can't say for certain that it is, much less predict when it will collapse. However, interest rates charged by the Federal Reserve are low, and debt levels are high in our economy, so it is reasonable to conclude that it could potentially be building toward another bubble like that which collapsed in 2007/2008.

The boom and bust business cycle is explained by the Austrian school of economics as the consequence of central banks manipulating interest rates, inflation, and other aspects of the monetary system to send false signals into the market. Low interest rates make it easy to borrow money, and tells producers that there is a large quantity of saved wealth. This signals a potential market demand for durable goods including housing, office spaces, and other major construction projects. As construction concludes and the realization hits that there is no real saved wealth to spend on these investments, the misallocated resources need to be liquidated. Prices fall. However, governments and their banking systems don't want the economy to correct, so instead, the usual response is to double down on cutting interest rates to encourage people to borrow more money in order to buy these assets at the falsely high market price. When these borrowers eventually find themselves upside-down after an uncontrollable market collapse, the entire industry collapses as it did when I was working as an architectural draftsman a decade ago.

Are we seeing this happen again? I can't say for sure. Check out this free e-book exploring one of the strange potential signals and the economic theory behind how it works and make up your own mind.

2. Will the free market be blamed for the next collapse?

Of course it will. A scapegoat is always needed, no matter how irrational the blame.

Central banks manipulating interest rates are not free market actions. Subsidies, bailouts, sweetheart contracts, crony corporations, protectionism, trade restrictions, taxes, licenses, arbitrary government regulations, and innumerable other interventions should make the accusation of free market faults absurdly obvious.

But people believe beyond all reason that governments are looking out for the best interest of the everyman, and that if something must be done, and government officials say they are doing something, the must be doing whatever it is that must be done. This false belief in the politician's syllogism combined with the propaganda of benevolent government administration of the economy throughout school and reinforced all over the media means that many just accept whatever explanation they are given regardless of how irrational it is.

3. What should be done to insure your security?

This is harder to say for certain. While the signs of potential collapse may be present, that doesn't mean anything will come apart at the seams tomorrow, next month, or even next year. Panic guarantees stupid decisions. Consider all your assets, and take some time now for a calm and deliberate risk assessment for everything: retirement savings, 401k investments, pension fund holdings, debt, income, real estate, etc. and consider consulting an expert on such matters.

Pay off your debts. I can speak from personal experience that nothing exacerbates a sudden loss of income like realizing bills are due whether there is income or not. Sort that out now, and you'll be better off no matter what the economy does. By and large, Dave Ramsey's advice is sound.

Definitely learn first aid and CPR, regardless of your outlook on the future.

I have poked fun at homesteading hype, but if you're in a position to do so, consider starting a garden, building a chicken coop for a few laying hens, or otherwise pursuing a hobby farm. It's a lot of work to try to make a fully self-sufficient spread, but learn now on a small scale if you think you might need to do it full time in the future. You could do a lot worse than to start with Carla Emery's book, The Encyclopedia of Country Living. Your local library should have a wealth of resources as well, and check whether they offer gardening programs or other DIY classes.

Consider learning a new skill. Small engine repair, computer programming, website development, gunsmithing, veterinary care, or anything else that interests you and could provide an opportunity to provide a useful service to others. New skills will help you grow as an individual no matter what happens, and a fallback career could keep you afloat in hard times.

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I am neither a bear nor a bull when it comes to the stock market or crypto. Be cautious, but not paranoid, and be willing to take risks if you can afford the downside potential. As we all can learn from The Hitchhiker's Guide to the Galaxy, always know where your towel is, and DON'T PANIC!