Product Description
2 volumes ... Read more

Product Description
Booms and busts are not endemic to the free market, argues the Austrian theory of the business cycle, but come about through manipulation of money and credit by central banks. In this monograph, Austrian giants explain and defend the theory against alternatives. Includes essays by Mises, Rothbard, Haberler, and Hayek. In his later years, Professor Haberler distributed many of these monographs to friends and associates. New edition with an introduction by Roger Garrison and an index. ... Read more

Customer Reviews (14)

Very informative
For anyone who wants to learn more about Austrian Economics or the Austrian Theory of the Trade Cycle, this is a great choice.The essays by some of the leading men in the Austrian movement do a fantastic job of bringing great information to their readers.

Great primer on Austrian Theory
If you don't know the first thing about economics you might want to read Henry Hazlitt's "Economics in One Lesson" first. This is book is a series of essays by four legendary Austrian economists - Ludwig von Mises, Gottfried Haberler, Murray Rothbard, and F.A. Hayek, and includes commentary by Auburn University's Roger Garrison. This book does an excellent job at explaining the trade cycle, which can be a complex topic. Basically, artificially low interest rates cause unsustainable booms, which lead to the inevitable bust. If there is genuine savings then the market interest rate will naturally be lower, and there will be genuine sustainable growth. Read this book and learn why we are in the current economic mess we are in.

Great Guide for Today
Very helpful, gives an outstanding foundation and explanation for todays tanking stock market, and economy.

Austrian Theory of Trade Cycle
An excellent book that should be required reading for those who are followers of the Keynesian Theory of Economics.This book will show how Keynes' theory is not sustainable in any economy and will do more damage than good.

A good quick summary of a provocative theory
This little book -- it is only 120 pages -- summarizes concisely the Austrian theory of the business cycle.It contains six essays, four from past masters of the Austrian school (Von Mises, Rothbard and Hayek) as well as an introduction and summary by a current follower of this school, Roger Garrison.

The theory can be summed up very quickly.A free market economy has a natural balance, based upon the laws of supply and demand.All will always be well in a free market economy, as long as the government does not interfere with the market.This logic applies to the financial market, as much as any other market.There is a natural rate of interest, produced by the voluntary savings of the population.If a nation has the natural rate of interest, it will naturally invest the right amount and its economy will expand in a stable manner.If, on the other hand, the government unwisely interferes, and sets an interest rate at a level other than the natural level -- and the usual mistake it to set it too low -- then the economy will grow too quickly, in an artificial manner, in which the improperly low interest rates will make stupid ideas seem like good ideas and encourage idiotic spending and investment.The solution is for total government non-intervention in the economy.No central banks.No government issuance of currency.

It is an interesting theory.It certainly has a good deal of force in explaining the current crisis, which obviously was caused by, or at least aggravated by, the Federal Reserve keeping interest rates too low, for too low, and issuing credit on far too easy terms.I have read a good deal on the problem of the business cycle.The discussion does always come back to the question of the money supply.Obviously, the business cycle is caused by excess and unwise expansions of money and credit.The question is, how do we restrict money and credit to a wise level?There are many theories about this, and none of them are very satisfactory.The Austrian Theory cuts the Gordian Knot of this problem.It says that you do not have the government issue money or credit at all; you have the market do so, so that there is a direct linkage between savings and investment.

I find this theory to be very logical. I am troubled, however, by how it would work in practice.Proponents of the Austrian theory believe that, if the government would just stay out of the economy, a natural banking system would develop with a natural interest rate which would naturally keep everything in balance.Except, in all of the long sweep of history, no such thing has ever happened.No real society has ever developed a real banking system in this manner.In the real world, the vast majority of societies have no banking system, as we understand it.In those societies, people who manage to save money put it under their bed, or in a tree stump, or somewhere else under their own control.They do not deposit it into banks, because they are not familiar with them and do not trust them.The "natural" system of banking is not to have a system of banking; the "natural" financial system is one of such utter mistrust that everyone hangs onto their money and does not risk it by investing it in anything.

In those societies which have developed banking systems, they have done so by developing elaborate legal and cultural norms which permit savers to have enough trust to put their money into banks.As we all know, that trust is very fragile.It is easy for a banking system to lose trust, and to have massive runs on the system destroy it completely.

Our current system keeps the trust of savers via the FDIC, and the whole panoply of regulation which comes with it.I am not a big fan of any of this, but it does seem preferable to periodic collapses of the banking system.The Austrian Theory says that all of this is a bad idea.So, how would the Austrian System keep people's trust in banks?The book under review does not answer that question, which lead me, in my first form of this review, to dismiss the theory's policy ideas as impractical utopianism.Since I wrote that, several commentators have responded to this concern.They have said that, if fractional reserve banking were abolished, then the system would be naturally stable.Under the current system, banks are able to create credit artificially, by lending many times as much money as they have on deposit.This is, of course, the root cause of the wild swings in credit, which underlie the business cycle.

What if we got rid of this?What if banks could only lend as much money as they on deposit?Well, in that case, there would be a direct and natural link between savings and investment.There would be no artificial credit; the only credit available would be from savings.Logically, this idea sounds as if it would abolish the business cycle.

I am uneasy about this idea, for one reason.This idea would greatly restrict credit.Obviously, we would have much less credit than we have had, for the last several centuries.Yes, this would probably get rid of the business cycle, but would it do so, at the cost of so restricting credit that it choked off economic growth? I do not know the answer to this question.The idea seems to me to be quite logical, but it so radical that I feel cautious about embracing it. ... Read more