My Understanding Of Austrian Business Cycle Theory

[eagleseven]

One would think that they'd realize how randian/laissez faire economics have failed every time they've been attempted.

Give me a country where and a time when they have been attempted.

most economists realize that far more success has been had using keynesian economic principles

Most economists recognize that Keynes was proven wrong by his pupil, Milton Friedman, in 1960.

Friedman won a Nobel Prize disproving Keynesian economics.

 

[mascale]

Alan Greenspan got a lot of credit for expanding the money supply when one or another of the stock market panics happened. Milton Friedman tried to show that in fact the increase of the money supply was more influential than Keynesian pump-priming.

The concept of "demand" is everywhere prominent in both formulations. So under Reagan, the inflation rate dropped from double digits to 3% or so: Maybe from higher interest rates. Under Reagan, the inflation rate dropped from double digits to 3% or so: Maybe from excessive unemployment, and income level disparities.

We can say, "Maybe" because that was the "Reagan Trajectory" of the "Spirit of Entrepreneurship" which eventually culminated in the attempted eradication of black, hispanic, and low income white youth in direct gang violence, and wannabe youth gang excesses. Even South Los Angeles gangs became famous for using the proceeds from their narcotics businesses:" In the income redistribution efforts of entire "'hoods" of South Central that the federal government wouldn't do for itself.

It was the "Spirit" of the time, famously described in the Reno Gazette. Milton Friedman was fond of the neo-Laissez Faire that is elsewhere noted to be a non-starter: In any economy with a number denominated money system.

Actually, in effect....."Niggaz" actually proved Milton Friedman wrong!

"Crow, James Crow: Shaken, Not Stirred!"
(Mayor Villagairosa's Los Angeles, even now finds itself trying to stay afloat, after the "New Reagan Trajectory of last year. Now there are scheduled layoffs. . . .which has even happend to blacks and hispanics and anglos who are not civil service protected!)

 

[jillian]

You ever read Adam Smith's Wealth of Nations?

Based on the above, I rather doubt it.

One would think that they'd realize how randian/laissez faire economics have failed every time they've been attempted. While the austrians have some interesting ideas if you wish to live in a dickensian nightmare, most economists realize that far more success has been had using keynesian economic principles. the private sector does not always make good decisions as corporations are amoral and act solely for their own benefit. yet, what benefits corporations does not always benefit the public and, certainly, it absolutely destroys the middle class.

there seems to be a correlation between people who believe in this type of economic slash and burn and those who think only landed gentry should vote.

interesting.

jill, real austrian econ has never been practiced. There is no laissez faire in the US.

There are still, and have been for a long time, a plethora of convoluted regulations in all economic sectors of the country that benefit big business and stifle all other.

Too many of you mistake a slight amount of deregulation in a certain sector of the economy for being 'laissez faire', and that couldn't be further from reality.

There are way too many regulations that are benefitting only the 'too big to fail' companies, and stifling a significant amount of potential competition within the market.

Forget "laissez faire". Can we at least start with reforming the regulatory standards in the country so that they open up the ability for the little guy to actually compete with the big boys?

i don't believe the 'little guy' can't compete. and i believe in regulation that keeps the population safe and that keeps workers fairly compensated with a living wage.

laissez faire capitalism was practiced until the depression... it was a failure... and left too many people unprotected. at that time, if you were old, you moved in with your children because 50% of old people lived in poverty.

it's very easy to talk about some randian nightmare... the reality of it though wouldn't be very good for you.

the funny thing is that it might be better for me.

yet i realize that a society without a middle class is a banana republic.

 

[Paulie]

One would think that they'd realize how randian/laissez faire economics have failed every time they've been attempted. While the austrians have some interesting ideas if you wish to live in a dickensian nightmare, most economists realize that far more success has been had using keynesian economic principles. the private sector does not always make good decisions as corporations are amoral and act solely for their own benefit. yet, what benefits corporations does not always benefit the public and, certainly, it absolutely destroys the middle class.

there seems to be a correlation between people who believe in this type of economic slash and burn and those who think only landed gentry should vote.

interesting.

jill, real austrian econ has never been practiced. There is no laissez faire in the US.

There are still, and have been for a long time, a plethora of convoluted regulations in all economic sectors of the country that benefit big business and stifle all other.

Too many of you mistake a slight amount of deregulation in a certain sector of the economy for being 'laissez faire', and that couldn't be further from reality.

There are way too many regulations that are benefitting only the 'too big to fail' companies, and stifling a significant amount of potential competition within the market.

Forget "laissez faire". Can we at least start with reforming the regulatory standards in the country so that they open up the ability for the little guy to actually compete with the big boys?

i don't believe the 'little guy' can't compete. and i believe in regulation that keeps the population safe and that keeps workers fairly compensated with a living wage.

laissez faire capitalism was practiced until the depression... it was a failure... and left too many people unprotected. at that time, if you were old, you moved in with your children because 50% of old people lived in poverty.

it's very easy to talk about some randian nightmare... the reality of it though wouldn't be very good for you.

the funny thing is that it might be better for me.

yet i realize that a society without a middle class is a banana republic.

You're still mischaracterizing the economy. Laissez faire, by definition, would mean no government intervention at all.

There was notable government intervention in the 1800's. There was the first and second bank of the US, the tariff of 1828, the McKinley tariff, the interstate commerce act, Sherman anti-trust, just to name some of the more well knowns.

I'm not sure how you can call ANY period during the history of the US "laissez faire".

And I agree that certain regulations are needed. I as an Austrian will never contend that. The consitution explicitly authorizes regulations. It's the DEGREE of regulation that has stifled competititon in this country.

Big business writes and lobbies for a lot of regulations, because those regulations make it next to impossible for many sectors to see any companies make it past the developmental stage and compete with the big companies.

If there is reform that is needed, it is on that front.

 

[mascale]

By 2006, the census county business patterns data showed that businesses with fewer than twenty employees was at about 5,378,000. The census of businesses with 500+ employees was 18,071. The larger companies had more than half the payroll, at $2,663,626,814.00. The businesses with fewer than 20 employees were still at $726,060,229.00. Adding the larger businesses than those, up to 500+ emplloyees, was still nerly half the payroll total.

Not only is that a lot of small and middle-sized businesses, but that is a lot money.

Anyone has to go with the safety and efficiency-oriented, more redistributive and socialist kind of flow: When discussing the burgeoning business sector of the United States economy.

"Crow, James Crow: Shaken, Not Stirred!"
(Many Nations now thrive with Harry Reid Style regulations, that even apply in Nevada!)

 

[Neubarth]

Money is a psychological concept, a promise written on a piece of paper.

The value of that paper is based on the mass psychological belief, or not, in the promise.

That is the most true statement I have seen on this forum in a long time.

Ironically there are people who want to destroy that belief. If they are successful they will take us back to the stone ages.

 

[Paulie]

Money is a psychological concept, a promise written on a piece of paper.

The value of that paper is based on the mass psychological belief, or not, in the promise.

That is the most true statement I have seen on this forum in a long time.

Ironically there are people who want to destroy that belief. If they are successful they will take us back to the stone ages.

There are no "people" who have done more to destroy the belief of monetary value than central bankers.

 

[Neubarth]

Money is a psychological concept, a promise written on a piece of paper.

The value of that paper is based on the mass psychological belief, or not, in the promise.

That is the most true statement I have seen on this forum in a long time.

Ironically there are people who want to destroy that belief. If they are successful they will take us back to the stone ages.

There are no "people" who have done more to destroy the belief of monetary value than central bankers.

Indeed, most central bankers are parasites on their nations. The only exception is the wonderful system that we have in America called the FED. That is the greatest thing since whipped cream on strawberries.

 

[Paulie]

That is the most true statement I have seen on this forum in a long time.

Ironically there are people who want to destroy that belief. If they are successful they will take us back to the stone ages.

There are no "people" who have done more to destroy the belief of monetary value than central bankers.

Indeed, most central bankers are parasites on their nations. The only exception is the wonderful system that we have in America called the FED. That is the greatest thing since whipped cream on strawberries.

Yeah a 95%+ loss of the Dollar's value since the Fed's inception is just splendid.

 

[Hum Dinger]

The Federal Reserve is the fourth Central bank since the the creation of the U.S.

Every central bank becomes the central object of critism by businessmen and bankers and economists - yet everytime they are abolished a major economic crisis occurs and the need for a central bank becomes apparent.

The Federal Reserve is not a government run banking system. It is comprised of an organization of private banks. The board of directors of the fed are all private bankers. It is very independant of the government.

Greenspan and Bernanke are students of the Friedman/Austrian school of economic thought - not Marxist or anything close. Yet ultimately they failed.

Yeltsin error Russia was the greatest modern day example of a hands off government that let the free market run it's course, yet it was the greatest economic failure in modern times.

The present day Russian banking system is totally controlled by the state - and the Russian economy is booming.

Perhaps what we need is a much more powerful central bank with much more government control.

So while you blather about your economic theories - none of which has ever proven correct, I'll just look at what has worked and what has not worked.

And yes, you could call me a Marxist, but more in the sense of "Das Capital" than "The Communist Manifesto".

The Central bank should be run by professional people who are not invested in the banks and who use a scientific approach to economics, rather than being modivated by personal greed.

 

[Oddball]

The Federal Reserve is not a government run banking system. It is comprised of an organization of private banks. The board of directors of the fed are all private bankers. It is very independant of the government.

Wanna buy a bridge?

 

[Kevin_Kennedy]

Greenspan and Bernanke are students of the Friedman/Austrian school of economic thought - not Marxist or anything close. Yet ultimately they failed.

If they're students of the Austrian school they literally learned nothing at all.

 

[Paulie]

Greenspan and Bernanke are students of the Friedman/Austrian school of economic thought - not Marxist or anything close. Yet ultimately they failed.

If they're students of the Austrian school they literally learned nothing at all.

I also love the Friedman part as if somehow Friedman and Mises are like-minded or something

 

[Kevin_Kennedy]

Greenspan and Bernanke are students of the Friedman/Austrian school of economic thought - not Marxist or anything close. Yet ultimately they failed.

If they're students of the Austrian school they literally learned nothing at all.

I also love the Friedman part as if somehow Friedman and Mises are like-minded or something

Well I let that one go because I can at least see how that mistake could be made, you'd have to get into the nuances between the Austrian and Chicago schools to know the difference. But calling Greenspan or Bernanke Austrians when the Austrians explicitly and unanimously condemn central banking is absolutely ridiculous.

 

[Paulie]

If they're students of the Austrian school they literally learned nothing at all.

I also love the Friedman part as if somehow Friedman and Mises are like-minded or something

Well I let that one go because I can at least see how that mistake could be made, you'd have to get into the nuances between the Austrian and Chicago schools to know the difference. But calling Greenspan or Bernanke Austrians when the Austrians explicitly and unanimously condemn central banking is absolutely ridiculous.

Well a huge difference would be that Mises would axe the Fed immediately if given the chance, while Friedman would talk tough about them while still making excuses for them as well.

Simply put, Mises is 100% against while Friedman is not. For us anti-fed advocates, anything less than 100% isn't good enough.

 

[Kevin_Kennedy]

I also love the Friedman part as if somehow Friedman and Mises are like-minded or something

Well I let that one go because I can at least see how that mistake could be made, you'd have to get into the nuances between the Austrian and Chicago schools to know the difference. But calling Greenspan or Bernanke Austrians when the Austrians explicitly and unanimously condemn central banking is absolutely ridiculous.

Well a huge difference would be that Mises would axe the Fed immediately if given the chance, while Friedman would talk tough about them while still making excuses for them as well.

Simply put, Mises is 100% against while Friedman is not. For us anti-fed advocates, anything less than 100% isn't good enough.

This is true.

 

[Paulie]

Well I let that one go because I can at least see how that mistake could be made, you'd have to get into the nuances between the Austrian and Chicago schools to know the difference. But calling Greenspan or Bernanke Austrians when the Austrians explicitly and unanimously condemn central banking is absolutely ridiculous.

Well a huge difference would be that Mises would axe the Fed immediately if given the chance, while Friedman would talk tough about them while still making excuses for them as well.

Simply put, Mises is 100% against while Friedman is not. For us anti-fed advocates, anything less than 100% isn't good enough.

This is true.

And that's precisely the reason why Friedman's approach is used by government, while Mises' is not.

Mises is the real deal, so he gets no love.

 

[Kevin_Kennedy]

Well a huge difference would be that Mises would axe the Fed immediately if given the chance, while Friedman would talk tough about them while still making excuses for them as well.

Simply put, Mises is 100% against while Friedman is not. For us anti-fed advocates, anything less than 100% isn't good enough.

This is true.

And that's precisely the reason why Friedman's approach is used by government, while Mises' is not.

Mises is the real deal, so he gets no love.

Of course, Friedman believed the government had a pivotal role to play in the economy whereas Mises didn't. The government's goal is to grow its power, so Friedman's "free market" ideas served the government's agenda perfectly.

And anyone who thinks the government would allow a true Austrian anywhere near the chairmanship of the Federal Reserve is absolutely out of their minds.

 

[Paulie]

This is true.

And that's precisely the reason why Friedman's approach is used by government, while Mises' is not.

Mises is the real deal, so he gets no love.

Of course, Friedman believed the government had a pivotal role to play in the economy whereas Mises didn't. The government's goal is to grow its power, so Friedman's "free market" ideas served the government's agenda perfectly.

And anyone who thinks the government would allow a true Austrian anywhere near the chairmanship of the Federal Reserve is absolutely out of their minds.

The level of idiocy is frightening.

 

[Neubarth]

Simply put, Mises is 100% against while Friedman is not. For us anti-fed advocates, anything less than 100% isn't good enough.

The Fed is the reason why we will pull out of this Depression. Europe does not really have a FED, and they are more that likely going to have to dissolve their union.