I think this is what happens when you lack a coherent explanation of the business cycle. If you think that speculation is the issue then things like this might

I think this is what happens when you lack a coherent explanation of the business cycle. If you think that speculation is the issue then things like this might be interesting. The real question is "Was the speculation funded by inflation or savings?" If it was funded by savings then failures aren't a problem. The capital is liquidated and the investors rebuild their savings and try again doing something. When debt is involved things get a lot worse in a fractional reserve system. The equity bubble of the 90s was largely fueled by inflation and the real estate bubble was as well. Both bubbles required bailouts. See the failure of Long Term Capital Management for more information on how the equity bubble of the 90s lead to instability. "America's Great Depression" by Murray Rothbard provides a good introduction to the Austrian Theory of the Business Cycle with a good historical analysis. Rothbard also covers alternative explanations of the business cycle. Even if you don't buy into the theory of the business cycle the book is worth reading just to learn just how involved in the economy Hoover really was.