{"id":13671,"date":"2015-10-22T06:01:20","date_gmt":"2015-10-22T11:01:20","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13671"},"modified":"2015-10-22T06:01:20","modified_gmt":"2015-10-22T11:01:20","slug":"how-the-business-cycle-happens-part-1","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13671","title":{"rendered":"How the Business Cycle Happens Part 1"},"content":{"rendered":"<p><a href=\"https:\/\/mises.ca\/wp-content\/uploads\/2014\/02\/federal-reserve.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-medium wp-image-7748\" src=\"https:\/\/mises.ca\/wp-content\/uploads\/2014\/02\/federal-reserve-300x166.jpg\" alt=\"federal reserve\" width=\"300\" height=\"166\" \/><\/a><\/p>\n<h3><span class=\"blue\"><a href=\"https:\/\/mises.ca\/posts\/blog\/how-the-business-cycle-happens-part-1\/\" target=\"_blank\">How the Business Cycle Happens Part 1<\/a><\/span><\/h3>\n<p>[This excerpt from the first chapters of Murray Rothbard\u2019s\u00a0<em>America\u2019s Great Depression<\/em>\u00a0(1963)]\u00a0<em>Reprinted from\u00a0<a href=\"https:\/\/mises.org\/library\/how-business-cycle-happens\">Mises.org<\/a><\/em><\/p>\n<p>Study of business cycles must be based upon a satisfactory cycle theory. Gazing at sheaves of statistics without \u201cpre-judgment\u201d is futile. A cycle takes place in the economic world, and therefore a usable cycle theory must be integrated with general economic theory. And yet, remarkably, such integration, even attempted integration, is the exception, not the rule. Economics, in the last two decades, has fissured badly into a host of airtight compartments \u2014 each sphere hardly related to the others. Only in the theories of Schumpeter and Mises has cycle theory been integrated into general economics.<a id=\"footnoteref1_8fg4pph\" class=\"see-footnote\" title=\"Various neo-Keynesians have advanced cycle theories. They are integrated, however, not with general economic theory, but with holistic Keynesian systems \u2014 systems which are very partial indeed.\u00a0 \" href=\"https:\/\/mises.org\/library\/how-business-cycle-happens#footnote1_8fg4pph\">1<\/a><\/p>\n<p>The bulk of cycle specialists, who spurn any systematic integration as impossibly deductive and overly simplified, are thereby (wittingly or unwittingly) rejecting economics itself. For if one may forge a theory of the cycle with little or no relation to general economics, then general economics must be incorrect, failing as it does to account for such a vital economic phenomenon. For institutionalists \u2014 the pure data collectors \u2014 if not for others, this is a welcome conclusion. Even institutionalists, however, must use theory sometimes, in analysis and recommendation; in fact, they end by using a concoction of\u00a0<span class=\"foreignword\">ad hoc<\/span>\u00a0hunches, insights, etc., plucked unsystematically from various theoretical gardens. Few, if any, economists have realized that the Mises theory of the trade cycle is not just another theory: that, in fact, it meshes closely with a general theory of the economic system.<a id=\"footnoteref2_mt22gyy\" class=\"see-footnote\" title=\"There is, for example, not a hint of such knowledge in Haberler's well-known discussion. See Gottfried Haberler, Prosperity and Depression (2nd ed., Geneva, Switzerland: League of Nations, 1939).\u00a0 \" href=\"https:\/\/mises.org\/library\/how-business-cycle-happens#footnote2_mt22gyy\">2<\/a>\u00a0The Mises theory\u00a0<em>is<\/em>, in fact, the economic analysis of the necessary consequences of\u00a0<em>intervention<\/em>\u00a0in the free market by bank credit expansion.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How the Business Cycle Happens Part 1 [This excerpt from the first chapters of Murray Rothbard\u2019s\u00a0America\u2019s Great Depression\u00a0(1963)]\u00a0Reprinted from\u00a0Mises.org Study of business cycles must be based upon a satisfactory cycle theory. Gazing at sheaves of statistics without \u201cpre-judgment\u201d is futile. A cycle takes place in the economic world, and therefore a usable cycle theory must [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[98,4918,383,7617,545,2084,10094,6542],"class_list":["post-13671","post","type-post","status-publish","format-standard","hentry","category-economics","tag-business-cycle","tag-economic-theory","tag-great-depression","tag-mises-institute","tag-murray-rothbard","tag-statistics","tag-stumper","tag-trade-cycle"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13671"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13671\/revisions"}],"predecessor-version":[{"id":13672,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13671\/revisions\/13672"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}