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

Additional Considerations on the Theory of the Business Cycle 505together with the fear and awe most people feel at the idea ofconfronting banks. Thus we conclude with Mises:For the nonmonetary explanations of the trade cycle theexperience that there are recurrent depressions is the primarything. Their champions first do not see in their schemeof the sequence of economic events any clue which couldsuggest a satisfactory interpretation of these enigmatic disorders.They desperately search for a makeshift [explanation]in order to patch it onto their teachings as an allegedcycle theory. The case is different with the monetary or circulatingcredit theory. Modern monetary theory has finallycleared away all notions of an alleged neutrality of money.It has proved irrefutably that there are in the market economyfactors operating about which a doctrine ignorant ofthe driving force of money has nothing to say. . . . It has beenmentioned already that every nonmonetary explanation ofthe cycle is bound to admit that an increase in the quantityof money or fiduciary media is an indispensable conditionof the emergence of a boom. . . . The fanaticism with whichthe supporters of all these nonmonetary doctrines refuse toacknowledge their errors is, of course, a display of politicalbias. . . . [T]he interventionists are . . . anxious to demonstratethat the market economy cannot avoid the return ofdepressions. They are the more eager to assail the monetarytheory as currency and credit manipulation is today themain instrument by means of which the anticapitalist governmentsare intent upon establishing government omnipotence.118118 Mises, “Fallacies of the Nonmonetary Explanations of the TradeCycle,” in Human Action, pp. 580–82.