Economic Recessions, Banking Reform and the Future of Capitalism

9 Pages Posted: 6 Jun 2011

Date Written: June 2011

Abstract

In the 2010 London School of Economics and Political Science Hayek Memorial Lecture, the author argues that flaws in the design of the monetary and financial system were responsible for the global financial crisis and the subsequent recession. The crash reflected the unsustainable nature of the bubble induced by artificial credit expansion created by fractional‐reserve banking under the direction of central banks. Such boom–bust cycles will continue until radical reforms are implemented, including a 100% reserve requirement for demand deposits.

Keywords: Austrian economics, central banking, economic cycles, financial crisis, fractional reserve banking

Suggested Citation

de Soto, Jesús Huerta, Economic Recessions, Banking Reform and the Future of Capitalism (June 2011). Economic Affairs, Vol. 31, Issue 2, pp. 76-84, 2011. Available at SSRN: https://ssrn.com/abstract=1857305 or http://dx.doi.org/10.1111/j.1468-0270.2011.02084.x

Jesús Huerta De Soto (Contact Author)

affiliation not provided to SSRN

No Address Available

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