America's Great Depression

In this way, say the accelerationists, the increase of consumer demand in a boom leads to intense demand for capital goods. Then, as the increase in consumption tapers off, the lower rate of increase itself triggers a depression in the capital goods industries. In the depression, when consumer demand declines, the economy is left with the inevitabl

What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the “natural rate of interest”).

People try to forecast and anticipate changes as best they can, but such forecasting can never be reduced to an exact science.

Changes in prices in general, then, are determined by changes in the supply of and demand for money. The supply of money consists of the stock of money existing in the society.

The severity of the Wall Street crash, he argued, was not due to the unrestrained license of a freebooting capitalist system, but to government insistence on keeping a boom going artificially by pumping in inflationary credit.

inflation, as we point out in this work, is not caused by deficits but by the Federal Reserve’s increase of the money supply.

The malinvestment caused by credit expansion diverted production into lines that turned out to be unprofitable (i.e., where selling prices were lower than costs) and away from lines where it would have been profitable. So there was overproduction of specific goods relative to consumer desires, and underproduction of other specific goods.

an unchanged consumer demand will generate a 200 percent decline in the demand for capital goods.

The market, therefore, provides a training ground for the reward and expansion of successful, far-sighted entrepreneurs and the weeding out of inefficient businessmen.