Booms and Busts

With regard to Tullock’s “major objection” to the theory, his argument (pp.

Recorded at Mises University 2004.

Recorded at Mises University 2004.

Doug French writes about the condo boom in Las Vegas.

Recorded at Mises University 2004.

Las Vegas is one big bubble, writes Doug French. Sin City's brand name has never been hotter.

The 1920s had difficulties, but the depth of the Great Depression was in 1931. Any theory of boom-bust events must ask why so many entrepreneurs made terrible errors in a cluster. Why do busts hit capital goods industries harder than they do consumer goods industries?

FDR’s stated New Deal purpose was to keep work weeks short and to extend minimum wages which were extremely high. But, production is what makes demand possible and what increases purchasing power, not federal mandates.

Monetary theory is where Austrians diverge the most from mainstream. Mises built a new taxonomy of money. He said money included any checking account deposits. The marginal utility of gold on the last day of barter was determined by the uses of gold. People then demanded gold as money because there was preexisting value. A paper dollar must have such a connection to money. Government cannot create money. Money is not neutral. The natural trend of prices in a market economy is falling.

Chris Westley explains that the only thing new about New Deal policies was their name and the people administering them.