I want to thank Domv for showing up in my comments and writing:
Another Note on Von Mises's (and Ron Paul's) Monetary Mental Disorder: The reason is that true economic (capital) expansion must have true savings underlying them. A credit expansion gives the illusion of savings where there are really none. This gives the economy false signals, and causes entrepreneurs to invest in higher orders of production that are unwarranted. After the mistakes build and build, a crash becomes inevitable. Attempts to alleviate the crash actually cause more problems, by preventing the market from clearing away the mistakes.
See? That is what is completely wrong!
If private demand for liquidity rises and credit does not expand--if we have what used to be called an "internal drain"--then that gives the economy false signals: it leads entrepreneurs to believe that there aren't available savings when they are. Similarly, if private demand for liquidity falls and credit does not contract, that gives the economy false signals as well--that leads entrepreneurs to believe that savings are available when they are not.
To say, as von Mises does, that attempts to cure depressions and boost employment:
from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this, as must constantly be emphasized, must necessarily lead to crisis and depression. Recurring economic crises are nothing but the consequence of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit...
is an #elementaryeconomictheoryfail of astonishing magnitude--a complete failure to understand basics that John Stuart Mill and Jean-Baptiste Say understood back in 1829.