[ECON 03] • America's Great Depression

Applied Austrian economics doesn't get better than this. Murray N. Rothbard's

_America's Great Depression_ is a staple of modern economic literature and

crucial for understanding a pivotal event in American and world history.

The Mises Institute edition features a new introduction by historian Paul

Johnson.

Since it first appeared in 1963, it has been the definitive treatment of the

causes of the depression. The book remains canonical today because the debate

is still very alive.

Rothbard opens with a theoretical treatment of business cycle theory, showing

how an expansive monetary policy generates imbalances between investment and

consumption. He proceeds to examine the Fed's policies of the 1920s,

demonstrating that it was quite inflationary even if the effects did not show

up in the price of goods and services. He showed that the stock market

correction was merely one symptom of the investment boom that led inevitably

to a bust.

The Great Depression was not a crisis for capitalism but merely an example of

the downturn part of the business cycle, which in turn was generated by

government intervention in the economy. Had the book appeared in the 1940s, it

might have spared the world much grief. Even so, its appearance in 1963 meant

that free-market advocates had their first full-scale treatment of this

crucial subject. The damage to the intellectual world inflicted by Keynesian-

and socialist-style treatments would be limited from that day forward.