The bust

The boom course ended with a claim written so that evidence could contradict it. This course follows the same mechanism through the contraction.

Seven lessons. The first is the constraint the boom runs into. The second is the claim that gives the tradition its reputation: that the damage was done during the boom and the bust reveals it rather than causing it. The third takes apart the word liquidation, which does more work in this literature than any other single word and is routinely read to mean something the authors did not say.

The fourth and fifth are the argument the school has with itself. A contraction in the quantity of money that follows a crisis is a different thing from the correction of the structure, and members of this tradition disagree sharply about whether it does any good. Rothbard argued in America's Great Depression in 1963 that it does. Hayek said in 1978 that he had changed his mind, that the effects of what he had called a secondary deflation may be worse than the original cause required, and that it has no steering function to perform.

The sixth lesson is the one most likely to go wrong. It sets out what named authors derive from the theory as a matter of policy, states it as their position, and takes none. This academy teaches what each side argues and argues none of them.

The last sets the 1920 to 1921 contraction beside the one that began in 1929, which is the comparison most often used to argue for this account, and explains why two episodes differing in many ways at once are weak evidence for anything.

Nothing here is a forecast, a policy position or a view about any security, and ValueScreener gives no advice.