Introduction

Abstract

This is the second of two volumes I have written on the business cycle. In a sense, the two volumes are a continuation of a previous book I have written titled Markets Don’t Fail! It is thought by many that business cycles—especially recessions and depressions—are inherent features of a free-market economy. It is claimed that a free-market economy is inherently unstable and leads to protracted periods of high unemployment and decreased economic activity. In other words, recessions, depressions, and financial crises are examples of alleged market failure. Government interference through so-called fiscal and monetary policies (among other means) is said to be needed in order to stabilize the market economy. Essentially, this means that the government must manipulate the amount of spending and impose various types of regulations on the economy to stabilize it.