I’ll state again what everyone familiar with the Mises-Hayek business cycle knows: the downturn is a response to an artificially inflated economic structure. Loose credit, courtesy of the Federal Reserve, has been sucked into certain sectors and industries in a way that cannot be sustained. The response of selloffs and business failures represents an injection of reality into an unreal bubble.
Far from regretting the economic downturn, then, it is something that should cause us to breathe a sigh of relief. And by the way, this is not new knowledge. F.A. Hayek spelled all this out in his amazing writings between the wars, now recently collected and available for the first time in decades in a new book published by the Mises Institute: Prices and Production and Other Works.
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The Downturn Is Good News.
Well we have been through this “Good News” before
many times since the FED was created and still the folks in Washington haven’t learned. Bu I suspect they know that what they are doing, theft is such an easy thing, to get something for nothing.
However there will come a time when the thieving will come to an end, then we will really have some “Good News” with a Depression greater than
the one of Roosevelt era. Will they pull it off again?
Stay tuned!
It’s only good news if markets are allowed to adjust and the downturn isn’t used as an excuse for ever greater government or central bank intervention in the markets.
As Rothbard makes clear in America’s Great Depression, it was the enormous policies of government intervention after the downturn had started that took what would have been a serious recession in today’s terms and turned it into the Great Depression.
Unfortunately, that seems to be what is happening today as well – see the coming nationalization of Fannie and Freddie, or the continuing depression of interest rates well below what the market would set them at for examples.
And if there is a strong enough undertoe of classical liberalism (thanks to the Mises Institute and Ron Paul) even the collapse of the U.S. economy would be ‘good news.’
As described by Hans Hoppe, competition between States or regions is far superior to a monopolistic State. As a variant of secession, different States or regions will quickly recognize that practicing classical liberalism is magnetic, attracting capital. The true entrepreneurial spirit will migrate there and the processes of prosperity will attract the allegiance of those who live there, which all the other States will want to emulate.
So instead of this current bureaucratic, fascist version of socialism constructed by the unConstitutional coup – which is claiming for itself the name ‘United States of America’ – the good news would be the prosperity of classical liberalism States freed from the ego-driven interventionists.
“In any case, listen, folks: there are no controlled experiments in econonomcs and social science generally. We have no idea based on the evidence alone whether the stimulus worked or didn’t work… There is a long tradition of economics that argues that the way to economic truth comes via deductive logic that is then applied to the real world.”
Can be the basic methodology of economics, especially the Austrian School, be further explained later?
“In any case, listen, folks: there are no controlled experiments in econonomcs and social science generally. We have no idea based on the evidence alone whether the stimulus worked or didn’t work… There is a long tradition of economics that argues that the way to economic truth comes via deductive logic that is then applied to the real world.”
Can be the basic methodology of economics, especially the Austrian School, be further explained later?
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