The Causes of the Economic Crisis
Stimulus or laissez-faire? That's the essential debate about what to about financial crisis in our time. It was the same in the 1930s.
In this world before and after the Great Depression, there was a lone voice for sanity and freedom: Ludwig von Mises. He speaks in The Causes of the Economic Crisis, a collection of newly in print essays by Mises that have been very hard to come by, and are published for the first time in this format.
Here we have the evidence that the master economist foresaw and warned against the breakdown of the German mark, as well as the market crash of 1929 and the depression that followed.
He presents his business cycle theory in its most elaborate form, applies it to the prevailing conditions, and discusses the policies that governments undertake that make recessions worse. He recommends a path for monetary reform that would eliminate business cycles and provide the basis for a sustainable prosperity.
In foreseeing the interwar economic breakdown, Mises was nearly alone among his contemporaries. In 1923, he warned that central banks will not "stabilize" money; they will distort credit markets and generate booms and busts. In 1928, he departed dramatically from the judgment of his contemporaries and sounded an alarm: "every boom must one day come to an end."
Then after the Great Depression hit, he wrote again in 1931. His essay was called: "The Causes of the Economic Crisis." And the essays kept coming, in 1933 and 1946, each explaining that the business cycle results from central-bank generated loose money and cheap credit, and that the cycle can only be made worse by intervention.
Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth. Rather, it arose because the credit expansion created the illusion of such an increase. Sooner or later it must become apparent that this economic situation is built on sand.
Did the world listen? The German-speaking world knew his essays well, and he was considered a prophet, until the Nazis came to power and wiped out his legacy. In England, his student F.A. Hayek made the Austrian theory a presence in academic life.
In the popular mind, the media, and politics, however, it was Keynes who held sway, with his claim that the depression was the fault of the market, and that it can only be solved through government planning.
Just at the time he wanted to be fighting, Mises had to leave Austria, forced out by political events and the rising of the Nazis. He wrote from Geneva, his writings accessible to too few people. They were never translated into English until after his death. Even then, they were not circulated widely.
The sad result is that Mises is not given the credit he deserves for having warned about the coming depression, and having seen the solution. His writings were prolific and profound, but they were swallowed up in the rise of the total state and total war.
But today, we hear him speak again in this book.
Bettina B. Greaves did the translations. It is her view that in that in the essays, Mises provides the clearest explanation of the Great Depression ever written. Indeed, he is crystal clear: precise, patient, and thorough. It makes for a gripping read, especially given that we face many of the same problems today.
This book refutes the socialists and Keynesian, as well as anyone who believes that the printing press can provide a way out of trouble. Mises shows who was responsible for driving the world into economic calamity. It was the inevitable effects of the government's monopoly over money and banking.
Just as in his attack on socialism, here he was brilliant and brave and prescient. Mises was there, before and after. He was writing about contemporary events. He issued the warnings that the world did not heed, the warnings we must heed today.
Theory of Money and Credit Study Guide
Consider the timing of this wonderful study guide to the best book ever written on money and credit. The book itself was written 100 years ago. The world economy is in the throws of another financial and debt crisis. Keynesianism has completely failed. Fiat money has too. Above it all stands Mises's masterwork, laying out the whole correct theory of money: it should be sound, solid, and market controlled.
Here is the guide to the book that still has a voice after 100 years, and that voice is stronger than ever. Mises wrote it as a warning against central banking, predicting that this institution would produce more instability than ever before, plus inflation, debt, and deep danger to the pillars of prosperity.
He was right in every case.
in this new guide, Robert Murphy takes the reader through Mises's book one chapter at a time. He provides summaries, points for discussion, study questions, and assesses the book in light of modern history.
Most of all, Mises's book teaches the theory of money, and with Professor Murphy's guide, you will understand where money comes from, what it does, how it is manage in a market, and what government does to destroy it. Most people agree that this was not only a great book, but perhaps the greatest monetary treatise ever written.
The original book can, however, be intimidating and even scary. This guide opens it up as never before!
The Theory of Money and Credit
Mises wrote this book for the ages, and it remains the most spirited, thorough, and scientifically rigorous treatise on money to ever appear. It made his reputation across Europe and established him as the most important economist of his age.
We think this Mises Institute edition is the most beautiful, by far, of any edition in print. It is the first English edition, complete with an explanatory foreword by Murray Rothbard and a preface by Douglas French. The size, look, and feel are just perfect, at once classic and very modern, in a case-wrapped hardback. And the price beats everything.
This classic treatise on monetary theory remains the definitive book on the foundations of monetary theory, and the first really great integration of microeconomics and macroeconomics. As Rothbard points out in his introduction to "the best book on money ever written," economists have yet to absorb all its lessons.
Mises shows how money had its origin in the market, and how its value is based on its usefulness as a commodity in exchange. In a step-by-step manner, Mises presents the case for sound money with no inflation, and presents the beginnings of a full-scale business cycle theory. This edition includes Mises's early blueprint, improved later in life, for a return to a fully backed gold standard and competitive banking.
The contents of this essential opus include:
- Part One: The Nature of Money
- 1. The Function of Money
- 2. On the Measurement of Value
- 3. The Various Kinds of Money
- 4. Money and the State
- 5. Money as an Economic Good
- 6. The Enemies of Money
- Part Two: The Value of Money
- 7. The Concept of the Value of Money
- 8. The Determinants of the Objective Exchange Value, or Purchasing Power, of Money
- 9. The Problem of the Existence of Local Differences in the Objective Exchange Value of Money
- 10. The Exchange Ration Between Money of Different Kinds
- 11. The Problem of Measuring the Objective Exchange Value of Money
- 12. The Social Consequences of Variations in the Objective Exchange Value of Money
- 13. Monetary Policy
- 14. The Monetary Policy of Etatism
- Part Three: Money and Banking
- 15. The Business of Banking
- 16. The Evolution of Fiduciary Media
- 17. Fiduciary Media and the Demand for Money
- 18. The Redemption of Fiduciary Media
- 19. Money, Credit, and Interest
- 20. Problems of Credit Policy
- Part Four: Monetary Reconstruction
- 21. The Principle of Sound Money
- 22. Contemporary Currency Systems
- 23. The Return to Sound Money
- Appendix A. On the Classification of Monetary Theories
 |
|
