![]() ![]() What happens during a depression? Should we expect it to end, or can an economy remain stuck at the bottom? Is “stimulus” required to start the recovery? The British Austrian economist “W.H.” Hutt In The Keynesian Episode: A Reassessment, provided a coherent theory of the downturn and recovery, driven by the market price system. The recovery is marked by an increase in production and the employment of resources that were idle during the bust. During the depression, there is unavoidable unemployment of both people and productive assets. The depression is a transitional period of reduced production that lasts until entrepreneurs restructure capital and labor into sustainable uses. ![]() There is a considerable Austrian literature on the unsustainable boom driven by credit expansion.
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