I have not been persuaded by Mish's alternate framework. To be clear, I'm not arguing that Mish's fans should abandon their hero. Rather, I will simply point out that Mish's "calls" have not been nearly as prescient as he so often claims.
It is the seeking of profits that is the key to increased living standards for everyone. But high profits do not necessarily correspond to real economic growth and can come about due to adverse circumstances.
Recorded at the Mises Circle at Furman Universityon November 13th, 2010.
When governments try to confer an advantage to their exporters through currency depreciation, they risk a war of debasement. In such a race to the bottom, none of the participants can gain a lasting competitive edge.
The key to avoiding "busts" is to avoid the credit expansion and "booms" that cause them. Booms are not periods of prosperity but of the squandering of wealth. The longer they last, the worse is the devastation that follows.
The worst of Bernanke's statements came in 2006, near the zenith of the housing bubble. This was the era of the subprime mortgage, the interest-only mortgage, the no-documentation loan, and the heyday of mortgage-backed securities.
Even though these economists — especially Diamond — are very smart and productive, they and their colleagues have hardly helped the plight of the unemployed, as we stumble ever deeper into depression.
Our analysis indicates that not only can fiscal stimulus not revive the economy but, on the contrary, it can also make things much worse.
The best remedy would be for the government to stop interfering and let the market process work.
