Roosevelt’s Recession of 1937, which saw the unraveling of supposed economic growth in the prior years, is oftentimes used as an historical example of what occurs when government decreases spending levels or the central bank fails to continue credit expansion. The use of this event to exemplify these things is disingenuous. More accurate lessons can be drawn, which show that only the market can fix itself.
Posts Tagged ‘cycle’
Hayek, the Business Cycle and the Financial System
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.
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.
The Panic of 1837 and the Contraction of 1839-43
The standard interpretation of the Panic of 1837 and subsequent recession blamed statebank monetary inflation abetted by President Jackson’s removal of the federal deposits from the Bank of the United States. Scott Trask, in a paper for the Mises Institute, offers a more Austrian explanation.
Consumer Credit and the Theory of the Cycle
Economist Jesús Huerta de Soto explains the role of consumer credit in the formation of the business cycle, in accordance with the Austrian theory. From his book, “Money, Bank Credit and Economic Cycles”.
A New Perspective on Roosevelt’s Recession of 1937
From the essay “The Dangerous “Lessons” of 1937. Roosevelt’s Recession of 1937 may be more relevant to the current financial situation in the United States than the Crash of 1929. This is because we may be headed in the same direction.
Introduction to the Austrian Business Cycle Theory: Explaining the Boom & Bust
The business cycle has been attributed to many factors by many different economists, but other than the Austrian Business Cycle Theory, none have been able to pinpoint the exact causations for an economic recession (or depression). The only theory which has consistently been able to cause the business cycle is the Austrian theory; a theory which presents the problem as a problem of fractional-reserve banking.
Krugman on Stimulus Size
An argument that theory has always, and will always, be superior to empiricism, as a response to Krugman’s most recent blog post.