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.
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.
Recorded at the Ludwig von Mises Institute’s Supporters Summit; Auburn, Alabama; 9 October 2010.
Recorded at the Ludwig von Mises Institute’s Supporters Summit; Auburn, Alabama; 9 October 2010.
Recorded at the Ludwig von Mises Institute; Auburn, Alabama; 9 October 2010.
Despite the chorus of praise, the TARP bailout was a terrible idea that will cost taxpayers both directly and indirectly through its perverse incentives. Only the Austrians consistently opposed the Republican and Democrat bailout schemes.
If mainstream analysts continue to disregard the role of regime uncertainty in the major depressions of the modern era, especially in accounting for their extraordinary duration, then they will only demonstrate the poverty of their own mode of analysis.
Some people are saying that all we need is optimism, as if our attitudes alone cause and fix the business cycle, and as if the real world doesn't matter at all. Actually, the "bad attitudes" of consumers and producers are the real fix: they lead to deleveraging and saving.
The Wikipedia entry on the real-bills doctrine advances the controversial proposition that banks can increase the quantity of money without diminishing the purchasing power of each unit. I will refer to it as the Sproul doctrine.
Just as more and more analysts are worried about the economy imploding again, the NBER announces that the recession ended back in June 2009. The whole episode underscores the crudity of mainstream economics.
