Paper Money Collapse by Detlev S. Schlichter

Author:Detlev S. Schlichter
Language: eng
Format: epub
ISBN: 9781118877364
Publisher: Wiley
Published: 2014-06-23T00:00:00+00:00

Notes

1. Ludwig von Mises, Human Action: A Treatise on Economics, 4th rev. ed. (Irvington, NY: Foundation for Economic Education, 1963/1998): 259–264, 490–493.

2. Ibid., 524.

3. George Reisman, Capitalism: A Treatise on Economics (Laguna Hills, CA: TJS Books, 1998): 55.

4. Ibid., 483–490; Mises improves the important theory on interest developed by Eugen von Boehm-Bawerk; see Eugen von Boehm-Bawerk, Positive Theories des Kapitales, 3rd ed. (Innsbruck: Verlag der Wagnerschen Universitaets-Buchhandlung, 1909): 426–453; for a short and excellent summary of these theories, see also Joerg Guido Huelsmann, Mises: The Last Knight of Liberalism (Auburn, AL: Ludwig von Mises Institute, 2007): 773–779; see also George Reisman, Capitalism, 55–56.

5. Mises, Human Action, 526.

6. Ibid., 526–537.

7. But an injection of new money via the loan market can temporarily depress market interest rates, as we will see shortly.

8. It would be more correct to say that low interest rates indicate that the public is happy to see resources allocated to uses where they are at greater distance to immediate consumption. This way, the statement includes investments in long-lasting consumption goods that only expend their use value over a longer period. The obvious example is houses. Low interest rates encourage investment in productive capacity and in long-lasting consumption goods. For ease of presentation, the analysis will focus on productive investment only. The results would be, for the purposes of this investigation, the same if we included real estate.

9. Carl Menger, Grundsaetze der Volkswirtschaftslehre (Vienna: Wilhelm Braumueller, 1871).

10. Boehm-Bawerk, Positive Theories des Kapitales.

11. Ludwig von Mises, Theorie des Geldes und der Umlaufsmittel, 2nd, improved ed. (Munich/Leipzig, Germany: von Duncker and Humblot, 1924). Further elaborations on Mises’s business cycle theory include: Mises, Human Action, 538–586; Mises, Geldwertstabilisierung und Konjunkturpolitik (Jena: Verlag von Gustav Fischer, 1928), translated in Percy L. Greaves, ed., Ludwig von Mises, On the Manipulation of Money and Credit (New York: Free Market Books, 1978); and Murray N. Rothbard, America’s Great Depression 5th ed. (Auburn, AL: Ludwig von Mises Institute, 2000), 3–36. Friedrich August von Hayek further elaborated on and expanded the theory. See Friedrich August von Hayek, Geldtheorie und Konjunkturtheorie (Vienna/Leipzig: Hoelder-Pichler-Tempsky AG, 1929); and Friedrich August von Hayek, Prices and Production (New York: Augustus M. Kelley, 1967; first published 1931). For a detailed modern restatement see Jesús Huerta de Soto, Money, Bank Credit, and Economic Cycles (Auburn, AL: Ludwig von Mises Institute, 2006): Chapters 5 and 6.

12. “Ben Bernanke: Remarks before the National Economics Club,” Washington, DC, November 21, 2002, www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm.

13. Gordon Tullock, “Why the Austrians Are Wrong about Depressions,” Review of Austrian Economics 2 (1987): 73–78.

14. Mises, Human Action, 572.

15. The Federal Reserve Act was signed into law on December 23, 1913. This was followed by the United Cigar Store Co. running full page newspaper advertisements in which it compared the law to the Declaration of Independence and predicted that financial panics “should under this new system become effete.” Quoted from James Grant, Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken (New York: Farrar Strauss Giroux, 1992): 140.

16. Tullock, “Why the Austrians Are Wrong about Depressions,” 73.

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