Ludwig von Mises Quotes

Depression is the aftermath of credit expansion.

If one wants to avoid the recurrence of economic crises, one must avoid the expansion of credit that creates the boom and inevitably leads into the slump.

Up until the Depression, recession had a moral character: it was supposed to purge the body economic of the greed and excess that attends a business expansion.

As 'Austrian' business cycle theory has pointed out, any bank credit inflation sets up conditions for boom-and-bust; there is no need for prices actually to rise.

The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.

The final outcome of the credit expansion is general impoverishment.

Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis.

Boom and bust is a term that applied to the Conservative years and two of the worst recessions in history.

What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.

Between 1857 and 1929, while regulators largely stood idle, the American economy swung through 19 national boom-and-bust gyrations that sometimes threatened to wipe out whole industries within months.

Not every business cycle has a financial crisis. Frequently they do.

Viewed from a distance, or through the eye of the All-Knowing CEO of the Universe, the crash of 2008 followed the usual pattern. A long-lived boom driven by cheap credit, going back as far as 1982 (though subject to interruptions in the mid-1980s and 1990s, and in 2001), came to grief because of a rise in the cost of borrowing money.

The second evil arising from the practice of banking, has its origin, in the system of credit itself; and the shock which, as it is rounded on prevailing opinion, it is liable to receive from whatever shakes public confidence.

Not only have government bills been dishonored and the interest on the public debt remains unpaid, but … so completely empty is the Treasury and destitute of credit, that funds cannot be obtained to defray the ordinary expenses of the different departments.

To be sure, booms and busts will come and go. But their severity can vary dramatically based on the policies in place to prevent them. With stronger regulations, neither the housing and derivatives bubbles nor the eventual crash would have been so bad.

We have depressions about every 10-20 years—just long enough for the current generation to forget the last depression.

Any organisation has to go through at least one depression to see how it survives, and a normal economic cycle takes seven years.

The bull market, rising prices, earning lots of money, make it seem as if the good days will never end. When prices are falling and there is a recession, that also feels as though it will last for ever. Politics is the same. People simply can't imagine changing circumstances.

All the risky things that were happening back in ’06 and ‘07 are back again to the same level, if not more. So we are in the beginning of a credit bubble, but just the beginning.

True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.

The boom, not the slump, is the right time for austerity at the Treasury.

Negative effects on the economy were covered up with a flood of liquidity from the Fed. That,plus lax regulation, led to a housing bubble, a consumption boom - but we were living on borrowed money. It was inevitable that there would be a day of reckoning, and it has now come. We will be paying the costs "with interest".

THERE is widespread agreement among economists that abuse of credit constitutes one of the chief unwholesome elements in business booms and is mainly responsible for the ensuing crash and depression.

Britain was set to repeat the boom-bust cycle that led to 15 per cent. interest rates for one whole year in the early 1990s.

The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.