Home > Work > The Austrian Theory of the Trade Cycle and Other Essays
1 " The boom brought about by the banks’ policy of extending credit must necessarily end sooner or later. Unless they are willing to let their policy completely destroy the monetary and credit system, the banks themselves must cut it short before the catastrophe occurs. The longer the period of credit expansion and the longer the banks delay in changing their policy, the worse will be the consequences of the malinvestments and of the inordinate speculation characterizing the boom; and as a result the longer will be the period of depression and the more uncertain the date of recovery and return to normal economic activity "
― , The Austrian Theory of the Trade Cycle and Other Essays
2 " If the prices rise in a continuous manner and if the borrower as a result gains a supplementary profit from the sale of the merchandise which he bought with the borrowed money, he will be disposed to pay a higher rate of interest than he would have paid in a period of stable prices; the capitalist, on the other hand, will not be disposed to lend under these conditions, unless the interest includes a compensation for the losses which the diminution in the purchasing power of money entails for creditors. "
