Austrian Economics: Application on Norwegian Business Cycles by Håkon Bjerkenes, Håkon Kiil, and Paal Anker-Nilssen (Norwegian School of Economics and Business Administration)
Source link: http://archive.mises.org/13984/working-paper-on-the-norwegian-business-cycle/
Working Paper on the Norwegian Business Cycle
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Page 43 states “In fact, Austrians do not believe that business cycles exist in the absence of interference from government or central monetary authorities.”
I was always under the impression that Austrians believe business cycles exist due to credit expansion within a fractional reserve banking system, regardless if a central bank or government intervention exists.
Runyan,
While it is possible for banks to practice fractional reserve and create localized “business cycles”, the systematic boom-bust that effects entire economies requires an over-arching systematic effector, like a central bank.
For example, the huge inflation boom-bust in Spain at the time that the Spanish were importing gold and silver from their new world conquests did not require a central bank, and may represent the only hard-currency systematic boom-bust in history, but it was still effected by the over-arching system wide infusion of huge quantities of gold and silver.
It’s interesting to note that the Spanish boom-bust was so big that the bust lasted for centuries after the high-point of the Spanish Armada.
Probably this was not because of any permanent damage done to the economy by the bust, but because the people in power found that they could make more money and be more secure in their positions in an impoverished, backward country than in a rich and free one.
Look at the ongoing destruction of the middle class and the sucking up of wealth into the hands of a tiny group of bankers, politicians and well-connected corporations, and you can see the same mechanism at work in the Greenspan Bust.
to curt:
if you read this paper, you’ll see it was not a hard money boom at all, but the typical frb-generated cycle:
http://mises.org/journals/rae/pdf/RAE9_2_4.pdf
Actually, Spain was subsidizing money creation with all that new gold and silver, so you could still call it a governmental effect. The same thing happened when a lot of that gold from the New World was funneled through the central bank of Amsterdam, which also subsidized coinage and money creation with the new specie, which was a major factor in Tulip Mania.
What kind of bs is this paper? I hope this was used to graduate from kindergarten…
Donkies…
What do you think of the case of Greece recession? Any opinion? This article intriguing me about Greece case.
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