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Keywords:

  • Austrian business cycle theory;
  • denationalisation of money;
  • Great Depression;
  • currency competition;
  • Ricardo Effect

The Austrian economists' analysis of the trade cycle and the Great Depression has relevance for the current global economic crisis. Excessive bank lending leads to unsustainable distortions in the economy causing the recession, which government spending can do little to mitigate. The long-run solution is a banking system with a high reserve ratio or competition in currencies.