What Hayek would do: How Austrian economists would fix the crisis

Type: Reports Written by Robert CB Miller | Thursday 4 April 2013

Robert CB Miller gives a modern Austrian explanation of the crisis, and argues that tightening the 'loose joint' of bank credit expansion is the key to preventing a repeat in the future. Based on the work of FA Hayek and other Austrian school economists, he says that the recession is a necessary part of the recovery process, as bad investments are liquidated and new profit routes discovered, but government draws out this process by regulating markets and restricting trade.

A summary of this paper is also available.