Booms and Busts

There is a letter from a Democratic party boss telling a woman that if she wants to stay on the WPA rolls, she needs to make a campaign contribution.

Meanwhile, such a system of "extended liability" for homeowners would have prevented the extra stress on banks caused by negative-equity defaulters. Because these people would know they are paying back the full sum either way, they would instead keep the house and pay back the (albeit, exorbitant when considering the plummeting value of their home) debt over time — perhaps while keeping their home, if they had proof of income.

Right now, as the economy reshuffles, there are more opportunities to generate change than ever — the kind of dynamic change that we need to grow out of this slump.

Private enterprise could have handled production of military goods better than controls actually did.

"Just like Obama's and FDR's 'deals,' John Law's prescription for what ailed France required no sacrifice."

But if you follow the Austrian recipe of allowing liquidation of bankrupt firms and debt, allowing prices to fall without monetary inflation, not propping up employment or subsidizing unemployment, and not discouraging hoarding, you will end up with the quickest possible recovery and minimize the magnitude of economic pain.

It is perhaps the finest introduction to the thought of a major thinker ever published in the discipline of economics.

We are also constantly told — this time by Chicago economists, not Keynesians — that "we learned in the Depression" that the Fed needs to rapidly expand the monetary base to avert disaster. Oops, turns out that's bogus too.

Modern macroeconomists failed to forewarn against the dangers of the recklessly inflationary monetary policy pursued by the Fed in the first half of this decade. They now are at a complete loss for a coherent explanation of its consequences in the deepening financial crisis and recession that afflicts the global economy.