REDISCOVERING MISES-HAYEK MONETARY AND BUSINESS CYCLE THEORY IN LIGHT OF THE CURRENT CRISIS: CREDIT EXPANSION AS A SOURCE OF ECONOMIC BOOM AND BUST

The article starts with a brief description of Mises’ monetary theory, with emphasis on the Misesian differentiation of two kinds of credit: commodity and circulation credit, and with the description of the impact of circulation credit expansion on the business cycle. Further on it is described how Mises’ insights constituted the kernel of Austrian Business Cycle Theory, and how the same observations on the nature of credit constituted the kernel of the Chicago Plan (though Mises’ views on the nature of credit led him to different conculsions than it led the authors of the Chicago Plan), and how this plan is being “rediscovered” now. The following sections deal with observations of one of the preeminent current macroeconomic researches, Mr. Claudio Borio, on the elasticity of credit as the source of the current crisis, and on the importance of the financial cycle in analysing the current economic crisis. The author of this text demonstrates that Austrian Business Cycle Theory gave the same answer regarding the sources of economic crises that now modern macroeconomic theory seems to be approaching, and that the postulates for successful financial cycle modeling are already included in the ABCT. Finally, some observations on the current crisis, as well as proposals of avenues of further research are proposed.