Austrian theory holds that government intervention prolongs recessions and triggers capital strikes

Evidence

Indeed, the very worst thing that can happen is for the government to get involved. By flooding the market with liquidity, keeping the rate of interest low when credit is scarce, or attempting to stimulate the economy to smooth out the cycle, government intervention simply prolongs the recession. Moreover, intervention produces a further pathology that is perhaps even more dangerous: it creates, according to Mises, a capital strike among investors. — Mark Blyth, Austerity, 393

Categorization

• DEFINE: Introduces the Mises concept of the capital strike — the mechanism by which activist fiscal policy is argued to backfire.
• XREF: Connects to the broader anti-stimulus logic that Mattei’s austerity cast will inherit — the theoretical grounds for opposing bailouts and fiscal expansion. — connects to: Austrian theory holds that government intervention, not markets, causes boom-bust cycles — Mark Blyth, Austerity: The History of a Dangerous…, 316; Austrian economics frames recessions as necessary austerity after an interventionist party — Mark Blyth, Austerity: The History of a Dangerous…, 316; Austrian business cycle theory blamed politics and left crisis victims unsupported — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 395 (+1 more)

Broader Connections

• Austrian business cycle theory blamed politics and left crisis victims unsupported #expands (0.78) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 395
• Austrian economics interprets corporate cash hoarding in recessions as rational fear of state expropriation #expands (0.75) — Mark Blyth, Austerity, 395