The great minds that run our governments and central banks, here in Ireland, the United States and in the EU certainly seem to think that bailing out the insolvent banks and giving them triple-A credit ratings (as here) that this will solve the credit crunch

Unfortunately none of them appear to subscribe to the ‘Austrian School’ of economic theory that maintains that all booms and busts, recessions and depressions, are caused by governments and their central banks, recklessly inflating the supply of money and setting interest rates artificially low.

In a masterful article written in 1969, Murray Rothbard, the US successor to the original Austrians, Ludwig von Mises and Friedrich Hayek, says that entrepreneurs and consumers take full advantage of this endless supply of cheap money, but make poor investing and spending choices because it is so cheap.

They keep doing this until asset and price inflation rises to such a point that they are forced to stop borrowing and spending. Sound familiar?

Once the bust happens, Rothbard quotes von Mises and Hayek’s advice: “In the first place, government must cease inflating [the money supply] as soon as possible. It is true that this will, inevitably, bring the inflationary boom abruptly to an end, and commence the inevitable recession or depression.

“But the longer the government waits for this, the worse the necessary readjustments will have to be. The sooner the depression-readjustment is gotten over with, the better.

“This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease.

“The government must not try to inflate again, in order to get out of the depression. For even if this re-inflation succeeds, it will only sow greater trouble later on.

“The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio.

“In fact, cutting the government budget will improve the ratio. What the economy needs is not more consumption spending but more saving, in order to validate some of the excessive investments of the boom.”

But there’s no point crying over spilt milk at this stage. The largest credit boom in history has gone bust and the die has been cast in favour of more government intervention.

So let’s suggest practical, money-saving actions that you and your family can take to cope both with the credit squeeze and the financial mugging we can expect by the Minister for Finance in next week’s budget.

Share the list with your friends and family and please send me your own recession-busting tips:

1: Cut your drinking and smoking in half and improve your health as well as your wealth.

Someone who drinks just five pints of beer in a pub and a bottle of wine a week at home can easily spend €1,560 a year. A one-pack-a-day smoker burns €2,500 a year. This 50 per cent cutback is worth as much as €2,000 a year.

2: Rent a spare room in your house and earn up to €10,000 tax-free a year.

3: Do a home energy audit and start turning down the thermostat. Grow your own veggies, bake your own biscuits and cakes (or trade biscuits for runner beans with your neighbour, the gardener.)

Learn the joys of slow cooking; use ‘eco-balls’ in your wash instead of expensive soap and conditioner and reduce that cost to about five cent a wash. Bicarbonate of soda and vinegar and water are two of the most effective, cheap, cleaning agents of all time.

Collect and use coupons but only for items you really need to buy. Reducing your grocery bill by even 10 per cent is worth about €1,000 a year to a typical family of four spending a total of circa €200 a week.

4: Sell the second car and save at least €4,000 a year in running costs and depreciation. Use taxis, buses, bikes and neighbourhood car pools instead for a lower savings. Learn some car (and home) maintenance skills.

5: Cut up your credit card and use 3V credit vouchers instead. You don’t get a free line of credit, but the 3V number can be used to purchase items or book tickets on-line as well as in shops.

6: Make your own fun – for free. Join the library and take out books, CDs, movie DVDs and magazines. Improve your social life by joining the local retirement club, history or musical society or political cumainn – they all hold regular social events.

Take the free yoga or swim class (for pensioners and the unwaged) at the community centre or public pool.

Bring your kids. Go hillwalking; become a volunteer gardener at local schools, retirement homes, community centres. Check out reduced or free entertainment offers from local theatres, cinemas and apply for free audience tickets to RTE television programmes.

7: Throw a seasonal clothes swap party. Everyone brings unwanted (but clean, wearable) clothes which they the swap. Ask them to bring a food and drink contribution too. Anything that isn’t swapped goes to the local charity shop. (Substitute children’s clothes, costume jewellery, DVDs, books, etc.)

8: Learn to barter: if you can help fill out someone’s tax return, maybe they’ll plant your autumn bulbs or stock your freezer with homemade brown bread.

9: Learn to haggle – there’s a recession on, don’t be shy to ask for a discount for cash payments.

10: Holiday at home or abroad for (nearly) free by doing a home exchange. If you exchange your existing home with another Irish person, you will save on flight costs too.

Next week: More money saving tips.