The Essential Hayek by Donald J. Boudreaux

Author:Donald J. Boudreaux
Language: eng
Format: mobi, pdf
Publisher: The Fraser Institute
Published: 2015-06-09T14:00:00+00:00

Chapter 7: Economic booms and busts

In fact … the very measures which the dominant “macro-economic” theory has recommended as a remedy for unemployment, namely, the increase of aggregate demand, have become a cause of a very extensive misallocation of resources which is likely to make later large-scale unemployment inevitable. The continuous injection of additional amounts of money at points of the economic system where it creates a temporary demand which must cease when the increase of the quantity of money stops or slows down, together with the expectation of a continuing rise of prices, draws labour and other resources into employments which can last only so long as the increase of the quantity of money continues at the same rate—or perhaps even only so long as it continues to accelerate at a given rate.

Friedrich Hayek (1974). The Pretense of Knowledge.

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