I recently debated with an Austrian friend about the causes of macroeconomic cycles. He argued that all macroeconomic distortions result from our unwillingness to let prices (including wages) adjust freely. According to this view, the Great Depression occurred simply because deflation was not allowed to work its way through the system.
Of course, I completely disagree with his position, but that’s not why I’m writing this blog. I’m writing because what stood out most from our conversation was the conversation itself — how almost ninety years after the fact we’re still fiercely debating what happened or didn’t happen or should’ve happened in the 1930s.