Booms and Busts

Mark Thornton appears on the Scott Horton Show to discuss the state of the economy.

When there is a cascade of failing businesses at one time, it is easy to think of it as an economic contagion that is a by-product of capitalism. Yet, a cluster of business errors can be laid firmly at the feet of government.

Mainstream economists are at a loss to explain why the current regime of inflation and central bank interventions have been so economically devastating. Understanding Cantillon effects is vital to making sense of the current madness.

As the US economy slowly implodes, the government causing the implosion is not done with its economic destruction. The Federal Reserve remains the engine of inflation, while tariffs and other interventions help to finish the job.

Keynesian orthodoxy claims that the cause of recessions is a decline in so-called aggregate demand. Besides confusing cause-and-effect, Keynesians don't understand that downturns are the result of malinvestments made during the boom because of central bank interference in the economy.

Bob Murphy and Jonathan Newman walk through his claim that real‑world exchanges clear markets—even with supposedly “sticky” prices—and what that implies for money, contracts, inventories, and unemployment statistics.

Is paying down the federal debt a recession trigger? Bob takes on the MMT claim and checks the record, citing US debt payoffs, Canada’s 1990s reforms, and ECB case studies.

Bob breaks down the fears about AI-driven unemployment and shows why economic reasoning still favors human prosperity in a high-tech world.

Jonathan Newman joins Bob to unpack Eliezer Yudkowsky’s viral bubble theory and contrasts it with the Austrian view of boom-bust cycles.

Milton Friedman and the Monetarists believed that fluctuations in the money supply caused the boom-and-bust business cycles. Their solution—keeping money growth slow and steady—would still lead to business cycles.