The 1920s had difficulties, but the depth of the Great Depression was in 1931. Any theory of boom-bust events must ask why so many entrepreneurs made terrible errors in a cluster. Why do busts hit capital goods industries harder than they do consumer goods industries?
FDR’s stated New Deal purpose was to keep work weeks short and to extend minimum wages which were extremely high. But, production is what makes demand possible and what increases purchasing power, not federal mandates.
Monetary theory is where Austrians diverge the most from mainstream. Mises built a new taxonomy of money. He said money included any checking account deposits. The marginal utility of gold on the last day of barter was determined by the uses of gold. People then demanded gold as money because there was preexisting value. A paper dollar must have such a connection to money. Government cannot create money. Money is not neutral. The natural trend of prices in a market economy is falling.
Recorded at the 2005 Austrian Scholars Conference, Mises Institute, Auburn, Alabama.
Recorded at the Austrian Economics and Financial Markets conference at The Venetian Hotel Resort Casino, Las Vegas, 02-19-2005
Recorded at the Austrian Economics and Financial Markets conference at The Venetian Hotel Resort Casino, Las Vegas, 02-18-2005
Sean Corrigan asks the crucial question: if the causes of the business cycle are that well known and understood, why can't business wise up and avoid the trap of making clusters of investment errors?
Ultimately, the power of the Austrian Theory of the business cycle is not whether some economists of the Austrian School rolled the dice on some day trades and made money, writes William Anderson.
Business cycles are usually treated as though they were unavoidable natural phenomena, writes William Anderson, when they are actually the result of government manipulation.
This year's Nobel laureates in economics, writes Frank Shostak, have contributed to further obscuring our understanding of the business cycle.
