Fundamentals of Economic Analysis: A Causal-Realist Approach

Author: Joseph T. Salerno

Joseph T. Salerno and Peter G. Klein are two of the most productive micro-economists in the Austrian School today. This seminar provides an introduction to Austrian Economics. Presented at the Mises Institute, 11-15 June 2007.
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10. Banking and the Business Cycle
Episode 10
Friday, 15 June, 2007

We have today a hybrid of two forms of banking — loan banking (non-inflationary) and deposit banking (inflationary if not 100% reserve holdings). The cause of booms is the credit expansion by central banks that is not backed by pools of private savings. The longer the inflation-driven boom continues, the worse the inevitable clearing bust must be. Austrian policy is to leave everything alone to permit all the adjustments needed. Keynesian policy is to keep inflating. Theirs is a crisis of interventionism. The tenth and final lecture from Fundamentals of Economic Analysis: A Causal-Realist Approach. Download the MP4 video.