Scott has Bob Murphy on the show to explain the Austrian School’s view of the boom and bust cycle in the American economy. Murphy explains why the Keynesians are wrong to assert that booms and busts are simply an inherent feature of capitalism. In fact, it is intervention in the free market by central banks—in particular the fact that they control the interest rate, which should be the free-floating price of borrowing money—that contribute to years of misallocation of resources. Eventually, there are too many investments that never should have been financed, with not enough real savings to carry them across the finish line, and business ventures start to fail en masse. Murphy and Scott explore some of the political dangers to having such a system. Notably, people who suppose that America is a laissez-faire capitalist paradise find it easy to blame the institution of capitalism when things go wrong, instead of recognizing that we already have a hugely socialized economy. Murphy works hard to persuade people of all the problems with our current system, even while things are good, so that they’ll be in a better position to understand why things really go wrong.
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Bob Murphy is an economist with the Institute for Energy Research, a research fellow with the Independent Institute, and a senior fellow at the Ludwig von Mises Institute. He is the author of Contra Krugman: Smashing the Errors of America’s Most Famous Keynesian, The Politically Incorrect Guide to Capitalism, and Choice: Cooperation, Enterprise, and Human Action, among others. Find him on Twitter @BobMurphyEcon and listen to his podcasts, Contra Krugman and The Bob Murphy Show.
This episode of the Scott Horton Show is sponsored by: NoDev NoOps NoIT, by Hussein Badakhchani; The War State, by Mike Swanson; WallStreetWindow.com; Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott; Listen and Think Audio; TheBumperSticker.com; and LibertyStickers.com.