Booms and Busts

Although John Cassidy didn't realize it, his analysis underscored the role that government policies played in the recent financial disaster.

To avoid runaway inflation we must have the resolve and the will to cease the inflationary expansion of credit, and to force the Federal Reserve System to stop purchasing assets, and thereby to stop its continued generation of chronic, accelerating inflation.

"Only savings can allow for sustainable economic growth."

In real life, Keynesianism doesn't work; the government bails out the bankers and then depressions last a long time.

As the gifts from these businesses pour in, think of it as a sign that this recession has not been nearly deep enough or gone on nearly long enough.

"Real GDP has nothing to do with the real world."

In the case of the current housing meltdown, the Austrian case is definitely right.

The observers today most reminiscent of our forefathers are the armies of tea partiers and bloggers, incensed that Main Street has gotten the shaft, first from the evils of hyperextended credit, and doubly now that modern solutions may prolong the madness.

The myth of the Great Depression being caused by laissez-faire capitalism — and being solved by either the New Deal, World War II, or both — is so prevalent that in popular-opinion surveys, Franklin Delano Roosevelt routinely appears in the top five of all US presidents, while the name of Herbert Hoover has become synonymous with government inaction during an economic crisis.

"So it is quite likely that in a free-market economy the threat of bankruptcy will bring to a minimum the practice of fractional-reserve banking."