Dr. Brian P. Simpson, author of Markets Don’t Fail! (Lexington Books, 2005) and an economist at National University in San Diego, CA, has written a new book on the business cycle and a free monetary and banking system. The book shows how government interference—particularly in the monetary and banking system—causes the business cycle, including the recessions, depressions, and financial crises that are a part of it. The book also shows how establishing a free market in money and banking can virtually eliminate the business cycle.
This book is a major contribution to the monetary, banking, and business cycle literature. It builds on the business cycle theory developed by Ludwig von Mises and Friedrich Hayek. The two-volume book is published by Palgrave Macmillan and is titled Money, Banking, and the Business Cycle, with subtitles of Integrating Theory and Practice for volume one and Remedies and Alternative Theories for volume two. Volume one was published in April. Volume two is due out in July.
Part one of volume one shows how manipulations of the supply of money and credit by the government are the primary cause of the cycle. Part two applies the theory to over 100 years of U.S. history to illustrate the explanatory power of the theory. The author uses extensive quantities of data to make his case, including data for interest rates, the rate of profit in the economy, the money supply, the velocity of money, industrial production, GDP/GNP, gross national revenue (a more comprehensive measure of spending and output than GDP/GNP), and more. He shows how the theory explains the Great Depression, the Great Recession, the recession of the early 1980s, and all episodes of the cycle in the U.S. since 1900. In addition, he goes back to 18th century France and the Mississippi Bubble to demonstrate the explanatory power of the theory.
Part one of volume two critiques alternative theories of the cycle, including Keynes’s theories of depressions and fluctuations, Keynesian “sticky” price and wage theory, and real business cycle theory. Part two shows what a free market in money and banking would look like, provides an outline to transition to a free market in money and banking, and gives a detailed explanation of why it would lead to greater stability in the monetary and banking system and raise the rate of economic progress in the economy.
Here are links to the two volumes:
It is also available at Amazon at a discounted price.
The book is highly recommended for anyone interested in free-market ideas or monetary, banking, and business cycle theory. Economics professors will find both volumes excellent for courses on “macroeconomics,” money and banking, Austrian economics, or the business cycle. Both volumes would also be great additions to the collections of university libraries and libraries of free-market institutions.