I’ll state again what everyone familiar with the Mises-Hayek business cycle knows: the downturn is a response to an artificially inflated economic structure. Loose credit, courtesy of the Federal Reserve, has been sucked into certain sectors and industries in a way that cannot be sustained. The response of selloffs and business failures represents an injection of reality into an unreal bubble.
Far from regretting the economic downturn, then, it is something that should cause us to breathe a sigh of relief. And by the way, this is not new knowledge. F.A. Hayek spelled all this out in his amazing writings between the wars, now recently collected and available for the first time in decades in a new book published by the Mises Institute: Prices and Production and Other Works.