The Austrian business cycle theory is often derided for promoting liquidationist policies in the face of depression and recession. This view is never more prevalent than when discussing the Great Depression. This morning, I had a chance to read a forthcoming article by our friend Lawrence White from the Journal of Money, Credit, and Banking in which he tackles the question as to whether the ABCT was really to blame for the liquidationist views. His conclusion is that it was the adherence to the real bills doctrine within the Federal Reserve, not the ABCT, that were closest to these views.
The paper is excellent and supplies (at least in my mind) ample evidence to counteract the accusations that have so long hindered Hayek and the Austrian theory.