Banks would never be able to expand credit in concert were it not for the intervention and encouragement of government. –Murray N. Rothbard
We investors live in the present and try to imagine the future, but we’d be wiser and richer if we had a better grounding in the past. In science, progress is cumulative; we stand on the shoulders of giants. In finance, however, progress is cyclical; we take one step forward, another back. Some of the best ideas about money and banking are the ones we’ve forgotten. I mean to revive them. –James Grant**
Murray N. Rothbard, the American Dean of the Austrian School, has an essay on what causes booms and busts. The 52 page book is here:
http://mises.org/Books/economic_depressions_rothbard.pdf This essay is an easy read for readers who want to dip their toe into this subject.
**Grant’s Interest Rate Observer, October 21, 2011 (Vol. 29, No. 20).
I mentioned the value of reading Grant’s here: http://csinvesting.org/2011/09/08/welcome-to-csinvesting-org/
At Grant’s Interest Rate Observer http://www.grantspub.com/ you could download and study all past issues since 1982 while learning how a thoughtful, articulate Graham and Dodd investor approached various market cycles through specific investments. Of course, as an ambitious student you would download the financials from the SEC’s website to look at the various companies Grant’s mentions as well as reading many of the books he suggests. Now I admit the person who applies himself to such a project would not be your typical person, but I am suggesting one way to learn.