Many economists seem to think that the Austrian Theory of the Business Cycle is an explanatory projected circumscribed by its dependence on the identification of lose money created by a central bank as the necessary explanans for the boom and bust cycle. But this is not Hayek’s view, and a careful reading of Hayek makes is clear that Hayek considered other sources of th
President-elect Obama has announced that Paul Volker will head a new Economic Recovery Advisory Board that will propose interventionist policies to bring about economic recovery from the recession.
At the same time, Obama announced that University of Chicago economist, Austan Goolsbee, wil head the staff of this new advisory board.
The Great Society is the lineal descendant and the intensification of those other pretentiously named policies of twentieth-century America: the Square Deal, the New Freedom, the New Era, the New Deal, the Fair Deal, and the New Frontier.
In the New York Review of Books, Paul Krugman calls for a “good old Keynesian stimulus.” He says we need to mimic Japan, Sweden, and FDR in terms of our strategy for giving new life to dead banks. Krugman, like Laurence Kotlikoff, is horrified that people are starting to save money.
This is F.A. Hayek in 1975 on Meet the Press. If you have never listened to a Mises.org podcast before, you must listen to this. I heard this Friday and I’ve been haunted by it ever since. A number of points stand out to me.
1) Hayek is amazing here. He holds the line. He is patient and explains very well. He refuses to relent. The core of his message is rooted in the Austrian view of cycles, and this interview demonstrates that he never stepped away from it, despite some far-flung claims.
[Book Review: Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age by Anne Goldgar • University of Chicago Press • 2007 • 425 pages]
Modern financial history is a long series of spectacular asset bubbles followed by equally dramatic crashes. Before, during, and after, the question always arises — whether it’s stocks, bonds, real estate, or collateralized debt obligations — what is the cause of such, as it appears in hindsight, folly?
Central bankers and public regulators have been particularly reluctant to acknowledge any direct responsibility for the recent subprime meltdown and crisis in worldwide financial markets. The crisis has to the contrary been rather generally interpreted as evidence of a need for more intervention, both by public regulators and central bankers. Nevertheless the role and responsibility of central bankers and regulators with respect to the recent turmoil need to be reassessed.
