Steven Horwitz – Causes and Cures of the Great Recession

Via the Institute of Economic Affairs, a paper from Steven Horwitz on the causes and cures of the great recession:

For many, the Great Recession and the boom that preceded it are evidence of the failure of the supposed deregulation of financial markets in the last decade and therefore constitute an indictment of capitalism more broadly. However, a closer look at both monetary policy and the effects of other government interventions on the financial system tells a very different story. The causes of the Great Recession lie in misguided government policy, not in the underlying workings of the market. Those policies led to a boom that could not produce sustainable growth and had to end in a bust, as it did. Finding ourselves in the bust necessarily produced by the artificial boom, we should not compound the errors of that boom by seeing more government intervention as the cure. The very distortions created by the policy-induced boom can only be corrected by the decentralised reallocation of resources by entrepreneurs.

Highly recommended.

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Comments & Responses

2 Responses so far.

  1. Nick says:

    And that policy is debt.

    Care to tell us how much debt you’ve hidden off the books?

    How much do you owe for the state pension for example?

    If you were running a company and used the same policies when it comes to reporting debts as the government you would be in jail.

    Why haven’t you jailed government accountants for fraud?