Wednesday, January 06, 2010
There's a pretty good chance that, in the period ahead, Austrian Economics will have its best decade in a hundred years. Why? Because, absent a solid economic recovery, the problems with mainstream economic thinking will continue to lay themselves bare for all to see and the odds of a solid economic recovery that doesn't come with an even bigger asset bubble than the last one are looking pretty slim right about now.
In his weekly commentary, Congressman Ron Paul (R-Texas) again asks the simplest of questions such as, "How can more easy money fix the problems caused by easy money"?
Keynesianism Delivers a Decade of ZeroWhile Austrian Economics is not the cure for all our economic ills (and the path to adopting such an approach in the U.S. would likely come with a degree of pain that would be far too much for any politician to bear), it does seem to make more sense than the present system with each incremental trillion dollars that is spent in trying to prop up the 20th century economy that seemed to work so well - right up until the beginning of the 21st century.
This past week we celebrated the end of what most people agree was a decade best forgotten. New York Times columnist and leading Keynesian economist Paul Krugman called it the Big Zero in a recent column.
It was encouraging that he admitted that blowing economic bubbles is a mistake, especially considering he himself advocated creating a housing bubble as a way to alleviate the hangover from the dotcom bust. But we can no longer afford to give prominent economists like Krugman a pass when they completely ignore the burden of taxation, monetary policy, and excessive regulation.
Afterall, Krugman is still scratching his head as to why “no” economists saw the housing bust coming. How in the world did they miss it? Actually many economists saw it coming a mile away, understood it perfectly, and explained it many times. Policy makers would have been wise to heed the warnings of the Austrian economists, and must start listening to their teachings if they want solid progress in the future. If not, the necessary correction is going to take a very long time.
The Austrian free-market economists use common sense principles. You cannot spend your way out of a recession...