Hans Gestrich

Gestrich was born in Berlin, Germany, on 17 September 1895.

Gestrich became press officer for the Reichsbank in 1931.^[1] He aligned his beliefs with Knut Wicksell, implementing the business cycle theory in his career. Gestrich participated in the Secret conference of the Friedrich List Society in September 1931 on the possibilities and consequences of expanding credit. [de].^[2][3]

He assumed the position of economic advisor for the Prussian State Bank and held it until his death in 1943.^[1]

Gestrich is credited as one of the key developers of the modern credit theory, alongside Wilhelm Lautenbach, Otto Pfleiderer, Leonhard Gleske [de], and Wolfgang Stützel.

An example, of one of the key insights from credit mechanics is that the amount of credit that can still be extended (its potential) is treated as a factor determining interest rates,^[4] in contrast to classical thesis, in which the level of interest is determined by the size of an already existing capital fund.^[5] From the perspective of credit mechanics, an expansion of the money supply through the deactivation of savings is also understood in a relativizing sense,^[6] "so long as its effect as an additional means of payment is offset by the temporary immobilization in the form of a savings deposit of a corresponding amount".^[7]

In his book Credit and Saving, Gestrich analyzes and discusses his issue with money and credit creation.^[8] Additionally, in his other book Monetary Policy and the World Economy, which was commented on by Wilhelm Lautenbach as "a work in the best modern style", he discusses that there is "necessary market adjustment". He wrote that from the Great Depression to the European banking crisis, commercial banks cannot in general be regarded as entirely independent of the state, since the state must under no circumstances allow for the collapse of large deposit banks, which would lead to damage to the economy. He then advocated for an additional type of private bank.^{[2][9]: 350}

Gestrich observed that the employment rate was an indicator of subsequent price trends,^[9]: 351 insofar as when employment declines, prices tend, based on experience, to remain at their accustomed level for a considerable period before an overall economic stagnation causes prices to fall.^{[1][9]: 351} He also advocated for individual saving, stating that it is an important, cultural, and self-responsible life management element. Gestrich adopted the "regulatory policy position", essentially allowing state interference in order to protect personal freedom.^[9]: 262