Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

PREFACE TO THESECOND ENGLISH EDITIONIam happy to present the second English edition of Money,Bank Credit, and Economic Cycles. Its appearance is particularlytimely, given that the severe financial crisis and resultingworldwide economic recession I have been forecasting,since the first edition of this book came out ten years ago, arenow unleashing their fury.The policy of artificial credit expansion central banks havepermitted and orchestrated over the last fifteen years could nothave ended in any other way. The expansionary cycle which hasnow come to a close began gathering momentum when theAmerican economy emerged from its last recession (fleeting andrepressed though it was) in 2001 and the Federal Reserve reembarkedon the major artificial expansion of credit and investmentinitiated in 1992. This credit expansion was not backed bya parallel increase in voluntary household saving. For severalyears, the money supply in the form of bank notes and depositshas grown at an average rate of over 10 percent per year (whichmeans that every seven years the total volume of money circulatingin the world could have been doubled). The media ofexchange originating from this severe fiduciary inflation havebeen placed on the market by the banking system as newly-createdloans granted at very low (and even negative in real terms)interest rates. The above fueled a speculative bubble in thexxi