Tuesday, 3 September 2013

Bubbles, Booms, and Busts: What Have We Learned?

By John P. Cochran

Bubbles, Booms, and Busts: What Have We Learned?

The always insightful and provocative George Selgin has some excellent commentary at Free Banking on the role of central banks in creating booms and busts. Selgin’s commentary and cautions to both monetarists and Austrians are excellent follow-ups to increased awareness of the importance of Austrian contributions by ‘mainstream’ economists recently highlighted here and here.

Selgin’s discussion along with these recent mainstream discussions provide a good time to re-asses some of what has been and still needs to be done within a capital-structure based macro (or perhaps following recent extension of ABCT by Andrew Young a time-structure based macro?). Selgin’s major suggestion for Austrians is that they pay more attention to the possibility of a monetary induced bust – the credit channel can work in both directions.

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