The one-line summary by Hazlitt wasn’t far wrong (paraphrased here): everything original is wrong and everything right isn’t original. But it’s worse than that: The work is actually unintelligible (and admitted to be unintelligible by Prof. Samuelson and others).

For those interested, settle the argument for yourself: give it a read.

The one-line summary by Hazlitt wasn’t far wrong (paraphrased here): everything original is wrong and everything right isn’t original. But it’s worse than that: The work is actually unintelligible (and admitted to be unintelligible by people like Prof. Samuelson).

For those interested, settle the argument for yourself: give it a read.

For bankers (especially central bankers), it is the most important price, which is the very reason they are so eager to manipulate it by force.

Mr. McCulley’s views are clearly formed by what he perceives to be good for himself, extending perhaps only to the very narrow class of people who are in his chosen occupation. His comments are therefore, as one would expect, an outline of policies and theories that make the world a more comfortable and profitable place for him.

This, of course, is not economics. The man simply knows which side of the bread is buttered, knows that government “regulation,” as he calls it, benefits him. He is therefore a parasite on productive people, and is perfectly happy to see governments hand out special favors and privileges so long as the benefits flow to him.

I certainly have no objection to his desire to improve his own life; I object to his using government, since doing so can only ensure that he gains at the expense of others, rather than as the result of mutually beneficial cooperation.

I would argue that Keynes had no coherent, much less viable, interest rate theory (or monetary theory for that matter). Hence, he used the phrase “animal spirits” as an irrational and ideologically biased “explanation” of investment and interest rate determination. Furthermore, differences between Austrians and Keynesians regarding the nature and determination of the natural (or in Misesian terminology, the originary) rate of interest are a major factor contributing to their extremely substantial disagreements regarding the causes of and policy reactions to the trade cycle. The Keynesians have little appreciation for what the rate of interest ultimately represents, i.e., economy-wide time preference, and the importance of time preference in directing investment decisions. Hence, they have no qualms regarding endlessly manipulating what is perhaps the most important price in the economy, although a few of them may be beginning to understand that “asset bubbles” and even general malinvestment are results of Keynesian policies.

But from another perspective, I guess progress has occurred in that an individual the stature of Paul McCulley at an investment firm such as PIMCO does discuss Austrian interest rate and business cycle theory, even if in a somewhat muddled and inconsistent manner, as noted by Robert in his posting.

E-mail him your feelings. May seem a bit strange, but I guess it would probably be the best way of clarifying his apparent misunderstanding of the Austrian school.