ABSTRACT
Conventional views of the American boom during the 1990s may hold that it was primarily a technological phenomenon characterized by the breakthrough of innovations and their rapid dissemination. In a Schumpeterian perspective, the boom may be interpreted as the occurrence of one of the seminal clusters of inventions and innovations that put the economy on higher levels of productivity and growth, while interpretations along the lines of the real business cycle models may note that the booming economy was brought about by major technological advances that spread about the entire economy. All of these interpretations assume an impact that will transform the economy as a whole and make economic activity more efficient and finally more beneficial for consumers. Methodologically, they concentrate on the “real economy,” largely ignoring the financial and monetary factors. But while non-monetary explanations do reveal some aspects of economic behavior, ignoring monetary conditions makes the analysis incomplete and often quite misleading. In a monetary economy, economic calculation is done in monetary terms based on profit and loss as they appear in accounting. The central categories of a monetary analysis of this kind are asset valuations, prices, profit and loss, credit and the interest rate. Such an analysis, based on a Misesian framework (Mises 1998: 535), would detect various elements in the boom that suggest that a monetary cycle has taken place.
