Booms and Busts

"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."

Every government intervention creates new problems in the course of vain attempts to solve the old.

Finally, the freedom of wage rates and prices to fall must be established through the repeal of pro-union and minimum-wage legislation, and more fundamentally, the education of the public concerning the errors of the Marxian exploitation theory and their replacement with actual knowledge of what determines wages and the general standard of living.

Stolyarov reviews Robert P. Murphy’s The Politically Incorrect Guide to the Great Depression and the New Deal (2009).

Recorded at the Mises Circle in Newport Beach, California, on November 14th, 2009. Sponsored by Louis E. Carabini.

Recorded at the Mises Circle in Newport Beach, California, on November 14th, 2009. Sponsored by Louis E. Carabini.