A Quote by Ludwig von Mises
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
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To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection -- a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.
Since the eighteenth century the immense expansion of the worlds wealth has come about as a result of a correspondingly immense expansion of credit, which in turn has demanded increasingly stupendous suspensions of disbelief.
The final outcome of the credit expansion is general impoverishment.
True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit expansion is built on the sands of banknotes and deposits. It must collapse.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.
Government policies try to prevent the emergence of serious unemployment by credit expansion, i.e., inflation. The outcome was rising prices, renewed demands for higher wages and reiterated credit expansion; in short, protracted inflation.
Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.
Once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities will not cease to rise, everybody becomes eager to buy as much as possible and restrict his cash holdings to minimum size... If the credit expansion is not stopped in time, the boom turns to crack-up boom: the flight into real values begins, and the whole monetary system founders.
The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.
You can get a lot done when you don't care about credit. My name was not on Medicaid expansion, but it never would have happened without the work that I did. The best leaders are the ones that want results, not credit.
Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing government work and public enterprises.
I say all the time I think there should be some courses in the regular schooling system that isn't, even like about credit, things that matter later in life. I learned the harder way: 'Look, I got a $500 credit card in the mail, let's go shopping!'
The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
Sometimes I wonder how much of these debates have to do with the desire, the legitimate desire, for that history to be recognized. Because there is a psychic power to the recognition that is not satisfied with a universal program, it's not satisfied by the Affordable Care Act, or an expansion of Pell grants, or an expansion of the earned-income tax credit.
No one person can take credit for the success of a motion picture. It's strictly a team effort. From the time the story is written to the time the final release print comes off the printer, hundreds of people are involved - each one doing a job - each job contributing to the final product.
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