Government and its henchmen are anxious to relegate into oblivion the fact that this rise is produced by an increase in the amount of money and money substitutes. They never mention this increase.
"The rationality, the effectiveness, and the justice of public policy which taxes enterprise according to one assumption while it gears, say, profit-incentive policies to its opposite is at least dubious."
From “Capitalism the Creator: The Mises Circle in Seattle,” a Curt and Allora Doolittle Seminar. Recorded 17 May 2008.
Let’s pull this sentence out of the civic pieties of our time and see what’s wrong with it: “We should all volunteer our time in
As with everything else in life, competition among conceptual frameworks is very healthy, since it can quickly highlight when an economist is likely abusing his favorite technique.
What Rothbard was describing, as have other Austrian-school economists, was the business cycle — when "businessmen are misled by bank credit inflation to invest too much in higher-order capital goods," like land, plant and equipment.
Capitalism should not be condemned, since we haven’t had it. Capitalism presumes sound money, not fiat money manipulated by a central bank.
But the Keynesian conclusion is rather obvious: the state, through its compulsory means, has to boost the level of aggregate demand in some way to stop the economy from falling into recession.
Thus, to say it all in one sentence, the threat of massive deflation can be eliminated, the threat of inflation ended, and the actual and potential domain of economic freedom greatly expanded, for $11 billion — an $11 billion that would not even be an out-of-pocket expense to anyone but merely a balance-sheet charge on the books of the Federal Reserve System when it deducted its gold holding from its balance sheet and added it to the balance sheets of the banks.
So it was in 1920 and 1921. The government didn't intervene and voila normalcy returned.
