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

What this quote means

The boom-bust cycle is a phenomenon caused by the manipulation of money supply, particularly through bank credit, leading to economic fluctuations.

Murray Rothbard's quote highlights how monetary policies, especially those involving expansion of bank credit, can create cycles of economic prosperity (boom) followed by downturns (bust). This intervention disrupts the natural market balance, leading to periods of unsustainable growth followed by corrections that can result in economic hardship.

Themes

Boom-Bust CycleMonetary InterventionBank CreditEconomicsMarket Fluctuations

In practice

Example use cases

In a discussion on economic policies, one might refer to Rothbard's quote to illustrate the dangers of excessive credit expansion.

More from Murray Rothbard

Human life is not some sort of race or game in which each person should start from an identical mark. It is an attempt by each man to be as happy as possible. And each person could not begin from the same point, for the world has not just come into being; it is diverse and infinitely varied in its parts. The mere fact that one individual is necessarily born in a different place from someone else immediately insures that his inherited opportunity cannot be the same as his neighbor's.
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Ultimately, there is no entity called 'government'; there are only people forming themselves into groups called 'governments' and acting in a 'governmental' manner.
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In the market, the fittest are those most able to serve the consumers; in government, the fittest are those most adept at wielding coercion and/or those most adroit at making demagogic appeals to the voting public.
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No one may threaten or commit violence ('aggress') against another man's person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a non-aggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory.
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If government manages to establish paper tickets or bank credit as money, as equivalent to gold grams or ounces, then the government, as dominant money-supplier, becomes free to create money costlessly and at will. As a result, this 'inflation' of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy.
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Once one concedes that a single world government is not necessary, then where does one logically stop at the permissibility of separate states? If Canada and the United States can be separate nations without being denounced as in a state of impermissible β€˜anarchy’, why may not the South secede from the United States? New York State from the Union? New York City from the state? Why may not Manhattan secede? Each neighbourhood? Each block? Each house? Each person?
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