i know that in the time after the Great Depression there was a great deal of government regulations and spending. But what i wonder is this; In the time between WWII and the 70’s i can not see there was any negative effects i.e. crisis, in this period of time. As i understand is this a period were government intervention in the market and so on was at is highest peak. Should not this have been a period of ongoing crises because of government intervention?
As i understand the economy was deregulated and so on from late 60’s early 70’s, and after that we have had alot more crisis in the economy and the financial markets, with recessions every eight years or so.
Is this the actual case or am i missing some crucial points?
Yes, when Nixon took the US off the Gold standard in 1971, inflation went through the roof and that is the reason there were so many economic crises after the 70’s. It kind of coincides with a general move towards market liberalization since the 70’s, which of course makes it seems as though crises were caused by too little “regulation”. But while markets in goods and services were generally liberalized post the 70’s, that really didn’t apply to financial markets that much - and that’s where we have to look to find the cause of financial crises. In fact, regulation was added at an unprecedented rate. Also government-imposed incentives to make dangerous financial bets - moral hazard - increased dramatically, to the point where those who didn’t engage in dangerous bets would be out-competed by those who did. And then we wonder why they make dangerous bets.
Not to mention that the gradual opening up of markets in developing countries since the 70’s introduced instability and unforeseen risk. We saw the crumbling of communism and immense political changes all over the world, problems the pre-70’s-era didn’t have to deal with. The pre-70’s era had another big advantage: cheap oil. Economic growth and stability is a lot harder to do during an oil crisis. I think people underestimate the importance of energy prices.
So you’re looking for an Austrian explanation of the post war boom? Like I said, it’s tangentially related (and at the least alluded to) in Wood’s discussions on the Depression, New Deal, and the War. But here’s more discussion/info: