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The manic depressive and the chronic depressive economy

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A couple of quotes from De Soto, pp 456-474. From “Effects the business cycle exerts on the banking sector”: Hence we can conclude that an inherent trend in the privileged exercise of fractional-reserve banking leads to bank consolidation and encourages bankers to develop and maintain close relations with the central bank as the only institution capable of guaranteeing banks’ survival in moments of crisis, situations banks themselves create regularly. Furthermore the central bank directs, orchestrates, and organizes credit expansion, making […]

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Are you an Austrian?

Economics is not a natural science. Unlike physics, you cannot reliably say things like: For a fixed amount of an ideal gas kept at a fixed temperature, P [pressure] and V [volume] are inversely proportional. (That is, halve the volume and the pressure will double.) Unfortunately, many economists and other social scientists think otherwise. Some believe the individual actions of large numbers of humans can be treated mechanistically. They use terms like “aggregate demand” as if the actions and aspirations […]

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The Russian Social Democrats

It was not without reason that the Russian Social Democrats, better known to history as the Bolsheviks, decided in November 1917 to call themselves “Communists”. And so “The Black Book of Communism” is proving an interesting read: But socialist revolution for Marx was not just a matter of economic development; it was at bottom an eschatological “leap from the kingdom of necessity to the kingdom of freedom.” Mises, Friedman and Hayek have something to say about that: Marx was wrong. […]

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