Mises gave a great deal of attention in both Human Action and The Theory of Money and Credit to the problem of the trade cycle. He showed that early 20th-century credit-expansion cycles were not symmetric. The expansion was characterized by inflation and relative price changes, but by no increase in aggregate real output; it was 'artificial'. But, the contraction showed aggregate output to fall. The complete cycle, therefore, was contractionary. Mises also attempted to give a prescription for an aggregate real expansion to occur. It would be slower than the artificial version and in order to be successful, it would have to be exempt from government attempts to support inflation such as deficit spending, easy credit, frequent devaluations and foreign exchange control.
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