Revista OEconomica

Tudor Constantin BĂLAN - Cycles of Freedom: Are Our Rights Today Permanently Secured, or Are We in a Transitional Phase? The Cases of Great Britain, the United States, and Russia

Marius-Cristian PANĂ, Adela BĂLAN - Economic Freedom and Prosperity: A Comparative Analysis of Welfare Determinants at the International Level

Ana Octavia ALBU - When Accurate Forecasts Still Produce Waste: Demand Shocks and Over-Forecasting Risk in Food Retail

Adrian-Ioan DAMOC - The Persian Pivot and the Reconfiguration of Geopolitical Realism: Iran and Venezuela in Strategic Competition among the United States, China, and Russia

Emmanuel Olusegun STOBER - Coercive Diplomacy in the Gulf and the Limits of the Strike-Forward Strategy: Toward a Middle-Power Coalition for Regional Stability

Sorin-Nicolae CURCĂ - On the Informational Entropy of Economic Shock

Florin DĂNESCU - The Banking Sector as Critical Infrastructure in the Logic of Hybrid Conflict: Post-2014 Legislative Convergence in Central and Eastern Europe and the Case of Romania

Alexandru POPOVICI - The Contribution of the Music Industry to GDP and Employment: A Comparative Analysis

Mohammed AL-NASSERY - Implications of the War in the Middle East: An Analysis of the Economic, Security, Humanitarian, and Political Dimensions

Mihai LĂCĂTUŞ - GDP as a Means, Not an End: Inequality as the Missing Variable in Fiscal Policy Design – A 60-Country Analysis of Economic Growth and Subjective Well-Being

Articles on Issue Theme

Jesus HUERTA DE SOTO

Universidad Rey Juan Carlos, Madrid

The logic of the historical evolution of the wrong institutional design that affects the financial and monetary system of the so called free market economies up to day is somehow easy to understand: bubbles did continue, financial crisis and economic recessions were not avoided, the bail out of banks was regularly demanded, the lender of last resort or central bank was created precisely to bail out the banks, and in order to allow the creation of the needed liquidity in the moments of crisis, gold was abandoned and legal tender laws and a purely fiduciary system were introduced all over the world. As we see the result of this historical process explains the wrong institutional design and financial mess that incredibly is still affecting the world at the beginning of the second decade of the 21st century. In this paper I will concentrate on the recent financial crisis and the current worldwide economic recession which I consider to be the most challenging problem we as economists must now cope with.

ŒCONOMICA no. 1/2011

Keywords: state, market, central banking, fractional reserve banking, fiduciary media, economic crisis

JEL: B13, H11, H20, O10

Financial Crisis and Economic Recession

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