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Crash and Carry: Financial Intermediaries, the Intertemporal-Carry Trade, and Austrian Business Cycles
Barnett II, William
Block, Walter E.
2009
Abstract
Barnett and Block (2008) establish that not only are fractional reserve demand deposits
fraudulent and create an Austrian Business Cycle (ABC), but that a certain type of
mismatching between time deposits and the period for which the depository institution relends
the deposited funds (banks or other financial intermediaries “borrowing short and
lending long”) are also contrary to libertarian law. The question we address in the present
paper is whether or not this type of disconnect between the period for which the ultimate
lender committed funds and the ultimate borrower gained possession thereof also
necessarily start an Austrian Business Cycle. Even though this does not constitute an
increase in the stock of money, we answer in the affirmative.
Series
Etica & Politica / Ethics & Politics
XI (2009) 1
Publisher
EUT Edizioni Università di Trieste
Source
William Barnett II and Walter E. Block, "Crash and Carry: Financial Intermediaries, the Intertemporal-Carry Trade, and Austrian Business Cycles", in: Etica & Politica / Ethics & Politics, XI (2009) 1, pp. 455-469.
Languages
en
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