Booms and Busts

Interviewed on American Vigilance Coast to Coast with Blake and Mike, 12 October 2008.

Many laboring in the thriving cottage industry of Hayek biographers, critics and interpreters have commented on the transition from a "Hayek I" to a "Hayek II" that began in the late 1930s, portraying it as almost wholly an intellectual re-orientation and change in research interests. Few, if any, have recognized the radical alteration in analytical procedure and rhetorical style that characterized this transformation.

It was credit expansion and the attempt to keep prices high that prolonged the Depression, which would otherwise have ended by 1931 or 1932. On this point Bernanke is all wet.

At the root of the problem are not mortgage-backed assets as such but the Fed's boom-bust policies.

As long as governments and central banks continue to focus on the monetary symptoms of the "secondary depression" and continue to ignore the structural aspects of the "primary depression," they act like quacks.

From “Choice in Currency: A Path to Sound Money”; the Mises Circle in Vancouver. Recorded 13 September 2008.

If we want to avoid the next great depression, all such government interventions should cease.

Building the world’s tallest building has been a matter of particularly bad timing by entrepreneurs.

Hayek was arguing that whenever and wherever credit is expanded beyond market dictates by a central bank, the result will be economic distortion.

From The Case Against The Fed (pp. 54-55), as narrated by Floy Lilley.