Briefly, the importance of the Hayek theory of the business cycle is that it puts the blame for the boom-bust cycle squarely on the shoulders of the government and its controlled banking system, and, for the first time since the classical economists of the 19th century, completely absolves the free-enterprise economy from the blame.
Murray Rothbard was a cheerful, sweet, likeable man who didn't hate anyone, especially fellow libertarians.
"Keynesians believe that long-run profit expectations, which have no basis in reality in any case, are subject to unexpected change. Economic prosperity is based on baseless optimism, economic depression on baseless pessimism."
But unlike today, the deflationists and hard-money men had the upper hand. As a result, the depression ended rather quickly (by 1821) when confidence in currency was restored and currency once again was redeemable in specie.
"An individualist unafraid to think for himself, Mariana clearly took little stock in the Jesuit ideal of the society as a tightly disciplined military-like body."
Finally, this view, based only on the doctrines of one obscure and heterodox scholastic, was enshrined in conventional histories of economic thought, where it was seconded by the free market but fanatically anti-Catholic economist Frank Knight and his followers in the now highly influential Chicago School.
Hoppe definitively established that the unhampered market is superior in improving social welfare.
People did not conceive that what they lamented was the necessary outcome of policies directed toward a lowering of the rate of interest by means of credit expansion.
We must hope that those in the Western world who seem to be ready to sacrifice intellectual freedom because it does not mean the same economic opportunity for all will yet realize what is at stake.
From An Austrian Perspective on the History of Economic Thought, Volume I. Pages vii-xiii in the text. Narrated by Jeff Riggenbach.
