Economics Dictionary of ArgumentsHome
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| Depression: Depression is a mental health disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest in activities. It can affect thoughts and physical well-being._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Depression - Dictionary of Arguments
Rothbard III 1000 Depression/Rothbard: (…) the depression phase is actually the recovery phase. Most People would be happy to keep the boom period, where the inflationary gains are visible and the losses hidden and obscure. This boom euphoria is heightened by the capital consumption that inflation promotes through illusory accounting profits. The stages that people complain about are the crisis and depression. But the latter periods, it should be clear, do not cause the trouble. The trouble occurs during the boom, when malinvestments and distortions take place; the crisis-depression phase is the curative period, after people have been forced to recognize the malinvestments that have occurred. The depression period, therefore, is the necessary recovery period; it is the time when bad investments are liquidated and mistaken entrepreneurs leave the market - the time when "consumer sovereignty" and the free market reassert themselves and establish once again an economy that benefits every participant to the maximum degree. The depression period ends when the free-market equilibrium has been restored and expansionary distortion eliminated. >Business cycle/Rothbard, >Crises/Rothbard. Rothbard III 1001 Government policy: It should be Clear that any governmental interference with the depression process can only prolong it, thus making things worse from almost everyone's point of view. Wages: (…) if the government keeps wage rates up, it brings about permanent unemployment. Prices: If it keeps prices up, it brings about unsold surplus. Credit expansion: And if it spurs credit expansion again, then new malinvestment and later depressions are spawned. Underconsumption/RothbardVsTradition: One obvious conclusion from our analysis is the absurdity of the "underconsumptionist" remedies for depression - the idea that the crisis is caused by underconsumption and that the way to cure the depression is to stimulate consumption expenditures. Rothbard: The reverse is clearly the truth. What has brought about the crisis is precisely the fact that entrepreneurial investment erroneously anticipated greater savings, and that this error is revealed by consumers' re-establishing their desired proportion of consumption. "Overconsumption" or "undersaving" has brought about the crisis, although it is hardly fair to pin the guilt on the consumer, who is simply trying to restore his preferences after the market has been distorted by bank credit. Solutionsaving/investment//Rothbard: The only way to hasten the curative process of the depression is for people to save and invest more and consume less, thereby finally justifying some of the malinvestments and mitigating the adjustments that have to be made. >Boom/Rothbard, >Business cycle/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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