Great column by Steve Hanke, John Hopkins University, is coming out in the January 2010 “Globe Asia” “Booms and Busts, pp. 18-20″
Highlights:
“Austrian theory played out to perfection during the most recent boom-bust cycle. By July 2003, the Federal Reserve had pushed the federal funds rate down to what was then a record low of 1%, where it stayed for a full year. —
With the fed funds rate well below the natural rate, a credit boom was off and running. And as night follows day, a bust was just around the corner.
The bust has manifested itself in various forms – the most recent one being the crisis in Dubai.”
And
“If 40 Wall Street and other record-setting skyscrapers are a guide, Dubai could be in for a Hayekian hangover. This condition – after the Nobelist Friedrich Hayek, a leading architect of the Austrian cycle theory- follows a boom -bust cycle, and most painfully visits the most most capital-intensive projects built during the boom”
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Refreshing
The use of the word hangover doesn’t sound right though, as some eminent economist uses this label every time to discard the ABCT altogether.
But every coverage of ABCT is good of course.
correction to the paragraph its Johns Hopkins.
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