LvMI scholar Jorg Guido Hulsmann has a paper entitled, “General Overview of the Magnitude of the Crisis: A Comment”, in the academic journal of The Pontifical Academy of Social Sciences. Scroll down to page 95.
Source link: http://archive.mises.org/21180/congratulations-dr-hulsmann/
Congratulations Dr. Hulsmann
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I was suprised that Jorg’s comment supports the bailouts.
I dont know if we read the same article. Jorg was anything but supportive of bailouts. Can you cite where he was in favor? I could have missed it.
Prof. Hulsmann suggests that the CW regarding the 2008 crisis was true; that the apocalyptic images presented by the banks wanting a bailout should have been taken at face value. I see no reason to think that the bad paper and debt restructuring couldn’t have been orderly handled by the courts and that day-to-day operations wouldn’t be allowed to continue, or that other capable actors couldn’t have stepped up. I was very surprised to see Hulsmann’s belief that the failure of a few banks would have led to a sharp unemployment of epic proportions.
A passage from the Hülsmann paper clearly shows that he believes the bailouts would be the worse thing to do. The paper was written in 2010 and his thesis has proven correct. An excellent synopsis of what was going to occur in the world economy.
Jorg quote from his paper.
“Most notably, the very measures that so far have been taken to confront the
crisis have raised new problems, and aggravated some of the problems that
led to the crisis”
I was surprised to see mention of deflationary spirals (if governments cut their spending). How can he reach that conclusion?
Cutting government spending does not shrink the money supply or even demand in general. It changes who has money to spend.
Read (or listen) to Hulsmanns “Deflation and Liberty” and you will get his take on deflation.
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