Is there a link to Daniel Kuehn’s paper? If you wish, you can private message it to me.
“A 3 year recession is still short.”
A 3 year recession is long by the historical standard of the business cycle, and certainly by the post 1945 business cycle.
“The receesion was still less severe than the great depression and recovered without fiscal stimulus.”
Again, totally wong. Australian economists have estimated that Australia’s 1890s depression was probably WORSE than Australia 1930s depression.
“The depression was caused by outside factors anyway.”
The severity of the depression was caused by a domestic asset bubble in property, a bursting bubble, a major financial crisis and mass banking failures of Australia’s free banking system - there was nothing external about that:
Charles R. Hickson and John D. Turner, 2002, “Free Banking Gone Awry: The Australian Banking Crisis of 1893,” Financial History Review 9: 147–167.
Ok, recessions get shorter. That’s no surprise, everything moves faster in the modern world. Computers wire money in seconds, often automated, it would be surprising if recessions didn’t play out faster. But somehow that observation is taken as proof that countercyclical policies work. But that is just a correlation, the era of Keynesian stimulus just happens to come later in time.
No, the internal asset bubble was caused by foreign capitali flows I.e. “external” factors. Secondly, a world wide depression occured in 1893 that started in the unted states (on the back of the free-silver movement, something which the people on this forum have yet to bring up…) that also contributed to the severity of the recession.
Even still, how do you explain the 40 straight years of economic porsperity? How do you explain the shortness of the 1840s recession?
What about Canada, Switzerland and Sweden? Where was their economic depression?
“No, the internal asset bubble was caused by foreign capitali flows I.e. “external” factors.”
It was aided by and made worse by inflows through the capital account, but the investment decisions that drove the bubble were made largely by the Australian banks - this was an internal factor.
The quote you use says “a collapse in property prices and exacerbated by the imprudent use of capital.” And who was it who was responsible for the
“imprudent use of capital”? It was the Australian free banks.
The financial crisis was also an internal factor, as were the bank runs and collapses and debt deflationary spiral.
“Even still, how do you explain the 40 straight years of economic porsperity?”
There WASN’T “40 straight years of economic porsperity”. This is completely false. Do you even look at basic economic studies?
Australia had moderate to severe recessions in 1867, 1878-1879, and 1885-1886.
You don’t seem to understand ABCT. The foregin capital flows are where the banks got the money. Yes, the banks themselves made the “mal-investments”, but that is completely compatable with ABCT. The foregin capital flows are what drove down the interest rate and brought on the sepculative bubble.
Wow! they had 3 moderate recessions? That sooo unstable! Wait? Didn’t we have 8 recessions in the post World War 2 keynesian era, culminating in stagflation?
Anyway, I did not say there were “no recessions” during this time period. I said it was 40 straight years of prosperity. 3 recessions in 40 years is still economic prosperity. It is about as good, if not better than the post WWII keynesian era, which you people call “economic prosperity”. Further more, the free-banking system was also not “full-reserve”, so, yeah there would still be some boom-bust. My conclusion from this data is that there is no reason to be believe that free-banking is especially ustable, or that central banking is especially stable. We had the great depression under the fed, and we still had plenty of recessions under Keynesianism