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Home | Mises Library | The Sovereign Debt Crisis

The Sovereign Debt Crisis

  • MAA_Murphy_SovereignDebt_2011.jpg

Tags EducationMoney and Banking

08/17/2011Robert P. Murphy

A major factor in the recent roller-coaster stock market is the sovereign-debt crisis. Investors the world over are growing more alarmed that the governments of the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain) will default on their debts, which have assumed gigantic proportions because of reckless spending and ill-conceived bank bailouts. The situation has become so serious that many analysts think it's only a matter of when the Eurozone will dissolve back into regional currencies. In order to provide a primer on these weighty headline issues, through the Mises Academy I am offering a short course on the sovereign-debt crisis, taught from an Austrian perspective, beginning next week.

The Scope of the Course

The course runs for four weeks, from August 24 through September 16. As usual, we are keeping it very reasonably priced at only $75. The first lecture will provide historical context, focusing on the tragic cases of Ireland and Iceland, which were initially hailed for the promarket reforms before things went terribly awry. Students will receive an overview of the global housing bubble and the debt loads in various countries.

The second lecture will describe the formation of the Eurozone, both from a historical and theoretical perspective. We will discuss the mainstream approach to "optimal currency areas," which is how people like supply-sider Robert Mundell or Keynesian Paul Krugman decide how large a territory a given fiat currency should cover. We will also (of course) critique the mainstream view from a Misesian perspective, in which a worldwide gold standard is the ideal.

In the third week we will summarize the major interventions to date, culminating in the recent announcement by the European Central Bank that it would purchase Italian and Spanish bonds to stave off investor anxiety. (Some analysts predict that the ECB might now be on the hook for acquiring half of the outstanding debt issues of these two countries.) Finally, in the fourth week we will use Austrian analysis to offer prospects for the future, from both a European and American perspective.

The following thumbnail gives a screenshot of the (tentative) full syllabus:

Structure of the Course

In a typical week of the course, I will give a live video broadcast on Wednesday from 6:00–7:30 p.m. EDT. (For those students currently taking my class on Rothbard, note that there is no conflict.) I will spend the first 75 minutes lecturing on that week's material, and then I will field questions from students for the remaining time. In addition, on Saturday I will have "office hours" (the times varying from week to week to cater to different students), meaning that I will be available on a live video broadcast to answer questions from any students who tune in.

Note that the Saturday sessions are purely for the students' convenience, and are not mandatory. Also, all broadcasts will be recorded and available to enrolled students, so that people who have a scheduling conflict can still take the class if they wish.

If a student wishes, he or she can simply "audit" the class. This was a popular option for many adults who took my classes on the business cycle and the Federal Reserve, because they had a busy work schedule and would only watch my lectures but couldn't keep up with the reading.

However, students may also take the class for a grade. These students will take a multiple-choice quiz each week, in addition to a final exam. Although the Mises Institute is not accredited, we will present certificates of completion and a formal grade at the end of the class to those students who desire it.

The Future of the Mises Academy

Whether it is in one of my classes or those offered by other instructors, I strongly encourage you to participate in the Mises Academy if you haven't already done so. Because of the economies of scale, we are able to provide top-flight instruction at a fraction of the cost of a typical university online class. As the awareness and popularity of the Mises Academy grows, we can offer an expanding list of courses from an expanding stable of superb instructors.


Whether you are a novice who wants to get a quick summary of "what the heck is happening in Europe?" or a more advanced student who wants to learn the subtleties of mainstream versus Austrian currency theory, this course is for you. I hope to see you next week.

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