The Tom Woods Show, episode 655.

Prepare to set fire to the index card of allowable opinion.

Your daily dose of liberty education starts here, the Tom Woods Show.

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Hi, everybody. Tom Woods here. Talking about business cycles today. we're talking in particular about an article on Austrian business cycle theory that goes a bit wrong. And we're going to try to put things right here. It was an article I got some requests for to deal with. It's an article by economist Steve Horwitz. We're going to link to it on the show notes page,

and we're going to talk about it here. Of course, the business cycle, we're talking about the phenomenon whereby the economy, just to put it in popular terms, seems to move in a cyclical

pattern, that everybody's doing well, then everybody's doing badly, and everybody's doing well,

and everybody's doing badly. We're not referring to the phenomenon whereby one sector of the

economy might be doing badly because, let's say, people's tastes change or some other pressure

may have come to bear. We're talking about why the whole economy seems to go up and down. And of course,

the Marxian view of all this is that that's what you get when you have capitalism.

It's just part of the internal dynamic of capitalism. But the Austrians famously reject

that argument and say that actually it's not natural to capitalism. It's caused by something

outside of, extraneous to the capitalist system, namely central banking in particular. It's really the

interference with interest rates and the injection of credit through the banking system that

leads to the problems. I will link also on the show notes page to episodes that we've done

on the business cycle if you need a little bit of a primer on that. I think it's maybe the most

important contribution the Austrian school makes for us to understand in this day and age.

So joining me to talk about this subject are two people, Jonathan Newman, who just received his

Ph.D. at Auburn University, where he's also been teaching. And Joe Salerno, who is

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