The Austrian Business Cycle in the FT
The investment theme of the autumn will instead be the vindication of the Austrian economists and their theories about the nature of the business cycle.
At this point, even most well-informed financial people will say "What? Austrian what?" After giving the matter a little thought, though, it will turn out that many will find they have been Austrians all along, though they didn't realise it.
There are many aspects to, and conflicts within, the Austrian school of economics, much of which is based on the work of Ludwig Van Mises and Frederick Hayek in the middle part of the past century.
While based on earlier theorists, the Austrians - not all of whom were Austrian - were reacting to the whole range of state-directed macroeconomics, from communism and fascism to social democracy and Keynesianism. They believed that state planning not only got the economics wrong but led to political and intellectual servitude.
The aspect of Austrian economics that will be central to investment decision-making this autumn is the role of central banking in generating unsustainable investment booms and subsequent busts.
The biggest world investment boom in history, which we have been going through for the past decade, is becoming a bust, most notably in the US housing market.
If the founding Austrians had Marxists and Keynesians as their opposition theorists, the present-day Austrians have Alan Greenspan and Ben Bernanke and their enablers in the US political system.