Booms and Busts

Jonathan Newman joins Bob to unpack Eliezer Yudkowsky’s viral bubble theory and contrasts it with the Austrian view of boom-bust cycles.

Milton Friedman and the Monetarists believed that fluctuations in the money supply caused the boom-and-bust business cycles. Their solution—keeping money growth slow and steady—would still lead to business cycles.

Mark Thornton walks through Ludwig von Mises’s three stages of inflation, gold/crypto and de-dollarization signals, and what it takes to step off before the crash.

Black swans don’t cause crashes: they reveal them. Mark Thornton shows how easy money breeds “sequestered capital” in opaque assets, priming the next bust.

Why do independent central banks exist in the modern economy? It was originally thought independent central banks would prevent government extravagance from creating inflation.

Red + green = brown. Mark Thornton shows how towering debt and easy money set the stage for hyperinflation.

In an attempt to explain business cycles, Milton Friedman came up with a plucked-string analogy. Like all Monetarist theories, however, this also had fatal flaws.

Few presidents—if any—in our lifetimes have done as much damage as George W. Bush did in his eight years in office. Unfortunately, a number of pundits are trying to rehabilitate his disaster of a presidency to contrast him to President Trump.

Greg Kaza reviews Ben Bernanke's 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to COVID-19. The book is a candid yet self-justifying defense of the Federal Reserve's monetary policy that refuses to acknowledge how stimulus has driven inflation.

Keynesian economists claim government budget surpluses are national savings, but real savings drive capital development. A surplus just means more revenue to the government, not the private economy.