I recently found the following document http://fraser.stlouisfed.org/docs/historical/brookings/17617_01_0007.pdf in which it says: “Fisher makes the point that the chief advantage of the scheme is not as so often believed safety of depositors, but cessation of inflation and deflation of our circulating medium, so mitigation of booms and depressions.” - it looks to me that fisher knew that the inflation and deflation of the money supply caused booms and busts. I was wondering how Fisher’s ideas contrasted with ABCT… or did Fisher simply agree with ABCT.
I suppose my more general question is: Are there other people who beleive that the inflation/deflation of the money supply are the causes of business cycles but who’s arguments are somehow different to ABCT?
Fisher focuses too much on aggregate demand… he stresses that limited debt would lead to an AD fall… in other words… this is demand side economics…
Austrian Econ. and the ABCT does not deal with demand side econ, for the most part… ABCT is very supply side, the supply being the increase in debt leading to malinvestment…
In Human Action, Mises writes that Fisher was an early proponent of the time preference theory of interest. He, however, helped develop the more mechanism quantity theory of money, and consequently was heavily critisized by Mises and Hayek for ignoring the effects of relative changes in price level. I don’t remember where I read this, but I believe that Fisher began to deviate from Menger at some point and obviously did not reach the same conclusions as Mises concerning the business cycle.