Monday, October 20, 2014

Ludwig von Mises and the Austrian Theory of Inflations and Recessions

Richard Ebeling emails:

Dear Bob,

I have a new article on the news and commentary website, "Epictimes," on "Ludwig von Mises and the Austrian Theory of Inflations and Recessions,"

This autumn marks the 80th anniversary of the appearance in English of Austrian Economist, Ludwig von Mises', important work, "The Theory of Money and Credit."

Though the English translation of his book may have appeared eight decades ago, in 1934, it nonetheless remains one of the most important works on monetary theory and policy penned in the 20th century.

In Mises' book is to be found the explanation of how the market, and not government, generates the emergence of money, and how it has been government's take-over of the control of money through its central banks that has resulted in the "business cycle," the patterns of booms and busts, inflations and recessions.

The market, when left free and competitive, always has a tendency to bring market supplies and demands into coordinated balance, including savings and investment through the intermediation of financial institutions.

But government central bank manipulation of the quantity of money and credit in the banking system, and the resulting distortions of rates of interest throw savings and investment relationships out of balance and set in motion the inflationary "booms" that are inescapably followed by the recessionary "busts."

Mises' "Theory of Money and Credit" (and his later master work, "Human Action, A Treatise on Economics"), if read and understood, continues to offer the clearest guide for learning how to avoid the roller coaster of government-caused economy-wide disruption of market activity.

http://www.epictimes.com/2014/10/ludwig-von-mises-and-the-austrian-theory-of-inflations-and-recessions/


Best,
Richard

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