Economic Depressions: Their Cause and Cure

The clearest short statement of the Austrian theory of the business cycle ever written. In this classic essay, Murray Rothbard asks the question every theory of depressions has to answer: Why does a whole economy of shrewd entrepreneurs suddenly suffer a cluster of losses at once? He traces the answer to government and central-bank credit expansion, which pushes interest rates below their natural level and lures business into investments that real savings can’t sustain. The bust that follows isn’t capitalism failing; it’s the market healing. And the only cure, Rothbard argues, is the one thing governments refuse to try: nothing.