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Time is nearly up for Ben Bernanke, the chairman of the Federal Reserve who supposedly applied his scholarly knowledge of the Great Depression to steer the U.S. to safety after the financial crisis.
In truth, Bernanke navigated a monetarist course that favored intensive intervention, following in the footsteps of many mainstream economists who grossly misunderstood the lessons of the Crash of 1929 and the ensuing malaise.
That lesson is that when corrective crashes occur, intervention is far from the cure — it is the cause.
Until we learn from the past, we will continue to expose ourselves to devastating booms and busts. The Bernanke-led Fed has only exacerbated the problem, leading us to the brink of an even worse correction.
To capture the lessons learned, we turn to a scholar of the Great Depression: Murray Rothbard of the Austrian School of Economics, who refutes the common misconception that “laissez-faire capitalism was to blame.”
His contrarian and far less popular — yet more accurate — view is that the booms and busts of the business cycle result from shocks to the system caused by monetary intervention….
- What the Austrian Business Cycle Theory Can and Cannot Explain (coordinationproblem.org)
- NEWSMAKER-Thrust into crisis, Bernanke tested bounds of Fed policy (uk.reuters.com)
- “The Austrian Analysis of the Great Depression and the Recent Recession are Wrong” (economistsview.typepad.com)
- The right’s antics could cause a Depression: The terrifying default aftermath (salon.com)
- Friedman, Hayek, and Keynes. (ritascosta.wordpress.com)
- FLASHBACK: ‘Politicians caused the Great Depression’ (marketsanity.com)