Robert Murphy puts together in one easy package the research of hundreds of scholars, showing that it was not capitalism that failed in 1929 but the boom times created by Fed credit expansion. Murphy takes aim at the Chicago School economists and the Keynesians who continued to be in denial on this central point.
A particularly great feature here for Austrians dealing with monetarist myths: Murphy explains that the deflation in the 1930s didn’t have to be somehow devastating. It was not egregious by historical standards, and was fully compatible with economic growth. In fact, the Fed tried but failed to flood the economy with money in the 1930s. Here Murphy provides a very compelling explanation of fractional-reserve banking and its effect on the supply of money.
He further shows that Hoover was not a free-market president. His policies were so statist that he might as well have been a Soviet agent. His biggest critic, who blasted him for his spending and centralization, was none other than FDR. But once FDR came to power, he enacted the longest string of cockamamie, prosperity-killing measures of any president in American history.
Murphy dissects the real history here with facts, analysis, clear prose, suggestions for further reading, fantastic quotations from all the main players, and even when he is discussing complicated data, he never leaves the reader behind.
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Robert P. Murphy is a Senior Fellow with the Mises Institute. He is the author of numerous books: Contra Krugman: Smashing the Errors of America’s Most Famous Keynesian; Chaos Theory; Lessons for the Young Economist; Choice: Cooperation, Enterprise, and Human Action; The Politically Incorrect Guide to Capitalism; Understanding Bitcoin (with Silas Barta), among others. He is also host of The Human Action Podcast and The Bob Murphy Show.
After his recent Zero Hedge debate with MMT co-founder Randall Wray, Bob takes a deep dive into the sectoral balance approach. He explains why the MMT argument is technically a tautology, how it's deeply misleading, and why the private sector doesn't need government deficits to save, invest, and accumulate real wealth.
This week, Bob explains Cantillon effects: the insight that new money doesn't raise all prices equally or simultaneously, but flows through the economy in a sequence that benefits early recipients at the expense of everyone else. Then, he shows why this phenomenon is the foundation on which the entire Austrian theory of the business cycle is built.
Bob untangles two arguments that even Austrian economists sometimes conflate: Mises' calculation problem and Hayek's knowledge problem. Then, he explains why the distinction matters, especially in light of recent claims that AI and modern computing could finally make central planning viable.
