Dean Baker Debates Bob Murphy on Recession Outlook

2023-11-14

The recurring cycle of economic booms followed by inevitable busts has remained a puzzle for generations of observers. While mainstream Keynesian and monetarist theories propose monetary interventions to smooth these fluctuations, the Austrian School offers a compelling and alternative perspective. Austrian business cycle theory provides a profound understanding of how artificially inflated booms sow the seeds of their own destruction. Delving into the depth of this theory illuminates the inherently unsustainable nature of economic upswings driven by the availability of cheap credit and inflation.
The Core of the Theory: Artificial Booms Lead to Busts
The Austrian business cycle theory argues that efforts to artificially suppress interest rates below natural market levels fuel an

2023-11-10

There’s a growing palpable sense of optimism among many economists and journalists that the United States economy is heading toward a growth phase while avoiding recession. They are in turn lauding the Federal Reserve for its strategic handling of inflation—with economic growth and low unemployment rates—as well as praising the efficacy of the Biden administration in reining in prices through social pressure on profit-making and through increases in production via large subsidy grants, along with the stimulus checks that have been distributed generously through various legislative acts.
This optimism and belief in the ability of the government to deal with economic problems come right after experiencing a severe inflationary crisis over the last three years, starting in late 2020. The