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I'm reading an article by Mises about the trade cycle, and I'm a little confused. The gist of what Mises is saying is that banks loan out more than what they actually have, which manipulates the market into lowering interest rates, which in turn makes otherwise unprofitable investments profitable.

What I'm having trouble is his description of this as an 'intervention' in the market. It seems to me that people willfully interacting with these banks and accepting non-backed paper currency that is accepted by other people shouldn't be considered an intervention; to me it's actually the market in action.

Someone help me out with an explanation.

I think I know what kind of responses I'm going to get, but I'm still a little confused.

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I think that the idea is that the banks are "misleading" the market somehow. Even if one is willfully acting based on the information available, if the information is false or intentionally misleading then the willfulness isn't real.

I honestly don't understand the particular mechanics of what the banks are doing, so I can't say how they are being misleading. It's my guess based on the conclusions of the author.