In “Monetary Theory and the Trade Cycle” Hayek holds that the business cycle is caused by fractional-reserve banking, which is a natural credit organization formed out of the market. If this is the case, then it follows that economic cycles are an intrinsic part of capitalism.
Posts Tagged ‘banking’
China’s Bubble Economy Re-Appears
China’s economic growth is turning out to be just another financial bubble ready to pop. The lesson is clear: monetary expansion causes economic instability. This bursts two theoretical bubbles: one, that instability is inherent in global capital markets, and two, that we are preparing to lift out of recession.
Central Banking and War
The Central Bank has been at the center of the State’s ability to finance wars on a large scale. As a result, it can be said that without central banking the large wars of the 20th Century would have never taken place, as they would have been impossible to fund.
Liberalized Capital Markets and Poverty
There seems to be a great deal of misconceptions in regards to what market liberalization is, to how Capitalism can foster economic growth in any given country and the case of globalism in the Third World. As a result, many have unconvincingly and incorrectly attributed greater impoverishment to the liberalization of capital markets.
Thoughts on Fractional-Reserve Banking
One of the most heated topics within the school of Austrian Economics is whether or not fractional-reserve banking would or should exist in a free market. There are considerable arguments put forth in support of either opinion by various scholars, but ultimately it seems as if fractional-reserve banking does not pass the test.
Lending Regulation is Counterproductive
The mainstream has pointed its finger on the apparent lack of regulation, and therefore calls for an increase in regulation on lending for the purpose of selling houses. These regulations will make the accumulation of wealth that much more difficult. We are being condemned to a road to serfdom
Assessing Alan Greenspan’s Role in the Current Economic Crisis
Economists David Henderson and Jeffrey Hummel suggest that then-Chairman of the Federal Reserve Alan Greenspan’s monetary policy did not have a large impact on the interest rates. Their analysis couldn’t be further from the truth.
