The Horizontal and Vertical Expansion of the Hayekian Triangles Represent the Over-Consumption and Mal-Investment of the Credit Expansion Policy

The crucial element of the model is the third tool—the Hayekian Triangles—which simply represents the inter-temporal structure of production. In Figure 2, the horizontal and vertical expansion of the Hayekian Triangles represent the over-consumption and mal-investment which take place as a consequence of the credit expansion policy adopted by the monetary authority. Garrison observes:

In effect, the Hayekian Triangle is being pulled at both ends (by cheap credit and strong consumer demand) at the expense of the middle—a tell tale sign of the boom's unsustainability.

However, these are only the short-run effects. In the long run, the effects are reversed, which is why Garrison calls it “the theory of the unsustainable boom.”

--Adrián O. Ravier, "Rethinking Capital-Based Macroeconomics," Quarterly Journal of Austrian Economics 14, no. 3 (Fall 2011): 353-354.