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Economic Effects of Covid-19 and Government Intervention

In this article, I want to write a shorter version of Jesús Huerta de Soto’s essay about The Economic Effects of Pandemics: An Austrian Analysis . De Soto is Spain’s leading Austrian economist, a Senior Fellow of the Mises Institute, and serves as professor of economics at King Juan Carlos University in Spain. In his paper, before introducing to us his thesis and arguments, he first gave us a summary of the Austrian Business Cycle Theory. This is de Soto’s summary of the Austrian Business Cycle Theory. It starts with the initiative of central banks in expanding credit with the assistance of the private banking sector in the infusion of this new supply of money into the economy. Through fractional reserve, these financial institutions create money “from nothing in the form of deposits which it injects into the system via loans to companies and economic agents in the absence of a prior real increase in voluntary saving.” As a result, “the productive structure shifts artificially toward n...