With the great bursting of the real estate bubble in 2008 the federal government is reforming and expanding its regulatory oversight in hopes of legislating away booms and busts. Recent decades have featured a series of speculative manias, followed by harrowing financial busts, with central banks applying the same tonic — a flood of monetary stimulus — to salve the nation’s financial wounds. The repeated stimulus has only served to create new bubbles, continued malinvestment and more financial pain.
The kings and queens of graduate economics classrooms -- real business cycle sophists, have been surprisingly mute on causes and consequences of the Second Great Depression. The silence is probably best explained by the feelings of shame for the utter failure of their models and predictions. But, alas, no need to wait any longer! Edward Prescott, Nobel Laureate of 2004, has finally chosen to creep out of the woods and enlighten us here.
When researchers compared the Shanghai Ranking of World Universities to budgetary constraints they found a number of important, but not surprising results.
The Shanghai Ranking includes things like the number of patents and Nobel Prize winners a university generates along with citations to faculty publications.
Current Austrian economists are the true heirs to the neoclassical economics that thrived up through the 1930s. It was in the spirit of Carl Menger and stressed the discovery of true causal laws that explained real economic phenomena such as business cycles. By the 1950s this Mengerian-neoclassical mainstream had been hijacked by positivists, Keynesians and mathematical modelers who have held sway ever since.
George Bush expanded domestic spending at a faster clip than Lyndon Johnson, set up the monetary and institutional conditions for a massive economic collapse, and then explicitly told us that it was necessary for America to abandon the market system “in order to save it”.
You would think that would be enough damage for one man.
