A Quote by Ludwig von Mises

Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.

Ludwig von Mises

Quote Topics

About Boom Bring Credit Depression End Expansion Fictitious General Must Prosperity Slump Temporary Trade

Quote Author

Ludwig von Mises
Austrian - Economist
September 29, 1881 - October 10, 1973

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.

Ludwig von Mises

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.

Friedrich August von Hayek

Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis.

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.

Ludwig von Mises

The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.

Ludwig von Mises

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.

Ludwig von Mises

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.

Friedrich August von Hayek

Depression is the aftermath of credit expansion.

Ludwig von Mises

One day, because they realize for some reason or other that they must stop credit expansion, the banks do stop creating new credit to lend. Then the firms that have expanded cannot get credit to pay for the factors of production necessary for the completion of the investment projects which they have already committed themselves. Because they cannot pay their bills, they sell off their inventories cheap. Then comes the panic, the breakdown. And the depression starts.

Ludwig von Mises

The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.

Murray Rothbard

Library of the Works of Ludwig von Mises”. Here is an article he wrote in 1951, some two years after his magnum opus Human Action appeared, where is lays out his case in a more popular form. The money sentences are “Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too.

Ludwig von Mises

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.

Ludwig von Mises

The final outcome of the credit expansion is general impoverishment.

Ludwig von Mises

If credit expansion, protectionism, and government spending were a path to prosperity, mankind would have long ago created heaven on earth.

Llewellyn Rockwell

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.

Ludwig von Mises

It may be assumed as a fixed truth that the prosperity and riches of the farmer must depend on the prosperity and good national regulation of trade.