Talk:Austrian business cycle theory/Archive 1

Archive 1

The Great Depression

Despite the fact that they disagree on the reasons, monetarists agree with austrians on what (who) caused the Great Depression:

Ben Bernanke: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

http://www.federalreserve.gov/boarddocs/speeches/2002/20021108/default.htm

They agree WHO to blame, but certainly not for WHAT. —Preceding unsigned comment added by 87.205.47.215 (talk) 22:12, 25 July 2008 (UTC)

Bernanke was talking about a sin of omission not of commission. The Fed failed to rescue the banks as the crisis started, causing the crisis to snowball into the great depression. Both Friedman and Bernanke believe that if the Fed had done its job, and bailed out the banks as the crisis started, the great depression would not have occurred. LK (talk) 15:29, 10 October 2008 (UTC)

Origins & Questions sections need to be wikified

The first half of the article needs to be rewritten and wikified.

The origins section is entirely a block quote from Roger Garrison. This raises numerous issues WP:SOAP, WP:NOTMIRROR, WP:NPV and copyright issues as well.

Leading questions as in the Questions section also aren't appropriate, as wikipedia is not a textbook, WP:NOTTEXTBOOK, and it potentially violates NPV as well.

Also, care should be taken not to use 'the encyclopedic voice' when stating the Austrian viewpoint. ie. preface all non-mainstream views with 'austrian economic theorists state', 'according to austrian economic theory', etc. If possible, opposing viewpoints should be integrated into the text, so that it doesn't read as if wikipedia is endorsing a particular point of view.

I suggest Fairtax as a reference. It's an excellent article that has taken care to be NPV on a very contentious issue.

lk (talk) 07:40, 4 September 2008 (UTC)

Come on, let's be reasonable. A couple of points: (1) Many times the article states "Austrian theorists believe" or "Austrian theorists state...". Saying this over and over in an article on ABCT would be repetitive (bordering on ridiculous) (2) This isn't contentious - the article accurately reflects the references (have you read the refs?). The theory itself is the theory. Whether it's right or not (in an absolute sense) is completely irrelevant to this page. If you want to work on business cycles please feel free. That page is a mess! It looks like someone vomited out the page. Given the unmitigated disaster that is business cycles, your comments on this page are...how should I put this...a little on the "nit picky" side. The quote is necessary to show the background. It's not even close to a copyright violation given it's not a "substantial" copy. I'd leave it, and encourage you to go to business cycles and make sure that's kept "mainstream". Austrianism has been so brutalized on WP before it's clear there's no way of making it "mainstream". Other than mutilating it. The theory is what it is. Read the refs before making judgments. Add all you want on the "other views" at the bottom of the page (I encourage neo-Keynesians in particular to add their stuff at the end, especially on the "paradox of thrift"). But please don't try to amend yourself. Somehow I don't think it will work. - LetThemMintPaper (talk) 07:55, 4 September 2008 (UTC)

In reply to (1) I agree that in many places, the article does preface with "Austrian theorists state...". I added some of these myself. However, articles must be careful about stating things in the encyclopedic voice, unless they are undisputed facts. Thus trumps considerations of repetitiveness. As for (2), one can argue that the fairtax is what it is as well. However, this article does not just descibe the pure theory, it relates it to the real world. And ABCT purports to describe how the real world functions. This makes it contentious. As for 'Origins', having a section that is entirely a quote does not make a good article. I suggest that you read the WP:QUOTE on this issue. Lastly, I hope you're not suggesting that you object to my making edits to the page. Remember WP:OWN. lk (talk) 15:07, 4 September 2008 (UTC)

You're curiously coy about business cycles. No comment on that I see. Too shy to admit it's currently garbage? Admittedly the fact that business cycles is currently a dog's breakfast does not mean your criticisms here are invalid. I just think you should prioritize your life and if you're interested in this topic, WP desperately needs someone (knowledgeable?) to work on business cycles. You seem to be implying you know your stuff on the topic, so I encourage you to start on that page. I myself have no interest in "improving" mainstream economics or neo-Keynesian economics or business cycles as I had to read that rubbish for my degree and have no interest re-visiting the land of the living dead. - LetThemMintPaper (talk) 23:12, 4 September 2008 (UTC)

It's probably no use asking, but do try to be civil. I have been cleaning up econ articles for the last year, thanks for asking, but given the scope of wikipedia, one cannot expect to fix all articles on topics that one has knowledge off. I assume you've had a couple of econ classes in college. That does not make you an expert on the subject. Wikipedia is not supposed to be balkanized into various parts where various independent groups write contradictory articles, it supposed to reflect the current scientific consensus on an issue, as represented by the latest academic peer-refereed writings on the issue. Keep in mind WP:SOAP and WP:OWN. lk (talk) 09:14, 5 September 2008 (UTC)

Be careful my friend. You have no idea who you are talking to. I agree you may have "knowledge off" the subject, but all I am trying to do is re-direct your substantial intellectual powers to more productive pursuits. Economic theory suggests that "low hanging fruit should be picked first" (i.e. obvious pricing errors should attract the most immediate attention from the free market). Business cycles is so obviously "mis-priced", it's literally crying out for attention. Why not take a bite off that first?

WP should have consistent standards of form, but it shouldn't be an Orwellian text with zombified, mindless, robotic, zealot-like adherence to one school of intellectual (or economic) thought. Your comment that the substance (not just the form) of all articles on WP should be completely consistent across the various schools of thought is a dangerous, mistaken belief. Very dangerous.- LetThemMintPaper (talk) 10:10, 5 September 2008 (UTC)

Just to be clear, you're not my friend, and I don't like to be threatened. I'ld like you to reflect for a moment. You seem to be reacting very strangely to the observation that the the first two sections of this article need to be wikified; and that contentious statements should not be made in the encyclopedic voice. lk (talk) 13:27, 5 September 2008 (UTC)

"I'Im" "reacting" not to your observation regarding form (which I clearly acknowledged are legitimate concerns). "I'Im" "reacting" to this very specific, very "strange" comment "you'youself" made above: "I assume you've had a couple of econ classes in college. That does not make you an expert on the subject. Wikipedia is not supposed to be balkanized into various parts where various independent groups write contradictory articles, it supposed to reflect the current scientific consensus on an issue, as represented by the latest academic peer-refereed writings on the issue."

I'I don't agree that "contentious" schools of thought should be censored by those hostile to those hostile to the mainstream. Let's be open about this: Austrianism (particularly ABCT) is about as "hostile" to the current central bank-dominated orthodoxy as you can get. As is clear from the refs, this stuff is contentious and contrary to the mainstream. Paul Krugman is never going to invite Robert K. Landis to a family dinner on Thanksgiving. But ABCT deserves to live unmolested by those from the orthodox mainstream. And business cycles deserves your immediate attention. - LetThemMintPaper (talk) 22:05, 5 September 2008 (UTC)

I suggest that you read through WP:NPV. Wikipedia is supposed to reflect current scientific consensus, as reflected by peer-reviewed non-self-published articles (see WP:SOURCES). This is true in both articles about mainstream theories and fringe theories. This isn't my opinion on how things should be, they are generally accepted guidelines on what Wikipedia should look like. But relax, all I'm suggesting is that the first 2 sections need to be wikified. lk (talk) 20:11, 6 September 2008 (UTC)

I have changed the section title to indicate that the entire section is the assertions of the theory. This is a much cleaner way of attributing the several assertions to the ABCT rather than to the article itself. The repeated use of "Austrian theorists believe" and "Austrian theorists state..." is awkward, annoying, and distracting. Dscotese (talk) 04:02, 10 September 2008 (UTC)

Please someone correct the grammar

I may be barred soon, and cannot edit on the semi-protect page, but can a mainstreamer PLEASE go in and correct this sentence:

However, William White believes that the Austrian explanation of business cycle might be relevant once again in recent environment of excessively low interest rates. According to the theory such environment results in an exuberant credit and an imbalance between saving and investment.[8][9]

Change to:

However, William White believes that the Austrian explanation of business cycle might be relevant once again in an environment of excessively low interest rates. According to the theory, a sustained period of low interest rates and excessive credit creation results in a volatile and unstable imbalance between saving and investment.[8][9]

I can't stand it anymore and the grammar in that sentence is almost as bad as that displayed on the mainstream economics page or the neo-Keynesian economics page. Please present Austrianism elegantly, and check your edits for grammar. Austrians don't "do" mathematical modelling (believing the ever-evolving market is far too complex for simplistic theoretical equilibrium-based models) and we laugh out loud when we see a "bell curve" in a financial equation (in the bond or stockmarkets especially). All we have is our logic and expression. If we don't present well on that score, we are left with nothing. - Ron Paul...Ron Paul... (talk) 05:08, 19 October 2008 (UTC)

"in an excessive credit creation" change to "in excessive credit creation" (Intro section) and "contacts" change to "contracts" in last sentence. Come on guys! Get it right or remove the semi-protect.

OK, I have slavishly made these changes, exactly as requested. --Ben Best (talk) 04:26, 21 October 2008 (UTC)

Thanks. I don't know whether that's a pun on "debt slavery" but I'll assume you don't know about previous edit wars elsewhere (they've been doozies!) and that the comment was an innocent one. Last tiny weeny request: Full stop goes before footnotes [8][9], not after. I'll shut up now. - Ron Paul...Ron Paul... (talk) 09:54, 21 October 2008 (UTC)

Great Depression

Mark Skousen writes that: "During the 1920s, there was a school of economics that did predict a monetary crisis: specifically, the up and coming generation of Austrian economists, Ludwig von Mises and Friedrich Hayek. Mises and Hayek argued, contrary to Fisher, that monetary inflation and easy-money policies are inherently unstable and create structural imbalances in the economy that cannot last. […] When the dire predictions of Mises and Hayek came true in 1929-32, the economics profession paid attention." This is confirmed by The Royal Swedish Academy of Sciences when they say: "He tried to penetrate more deeply into the business cycle mechanism than was usual at that time. Perhaps, partly due to this more profound analysis, he was one of the few economists who gave warning of the possibility of a major economic crisis before the great crash came in the autumn of 1929." So please explain why is contentious to say that Mises and Hayek predicted the Great Depression. Also, Block and Barnett do not say that the ABCT was never discussed by mainstream economists. The ABCT was very much in spotlight during the Great Depression, and only with the rise of Keynesianism it fell out of the focus. -- Vision Thing -- 11:46, 26 October 2008 (UTC)

I might also add that Austrians Robert K. Landis, Ron Paul, and even the Mogambo Guru all predicted the current crisis. But they were ignored (or laughed at). - Ron Paul...Ron Paul... (talk) 23:36, 27 October 2008 (UTC)

We cannot say that they predicted the Great Depression. We can say that people believe they did, or that they believe they did. I'll grant you that they predicted a financial crisis, sure, but whether they predicted the Great Depression is impossible to say -- especially since the consensus of mainstream economists is that the policies advocated by Austrians (tightening the supply of credit) actually caused the Great Depression. II | (t - c) 20:52, 29 October 2008 (UTC)

Agreed. History is always written by the victors, and the victors of the Great Depression were Roosevelt and Keynes. However, we have a real-world example of the same "issue" right now, with the current worldwide financial crisis. If "crazy-low" interest rates "solve" the current problem, mark that down as a win for Keynesianism. If the problem drags on (or results in "catastrophic" failure, such as a brutal Depression or currency crisis or hyperinflation), mark that down as a win for page 572 of von Mises' Human Action. I can't wait to see what's going to happen. - Ron Paul...Ron Paul... (talk) 23:19, 29 October 2008 (UTC)

Ok, I suppose that saying that they predicted a "major economic crisis" would be a more correct way of presenting this. -- Vision Thing -- 18:14, 1 November 2008 (UTC)

If you predict a "major economic crisis", eventually one will happen. Doomsayers can always point to some prediction that they made correctly, but they don't mention those that they did not get right. Austrians also predicted a major economic crisis in the early 1990's following the easy money policies in 1989. What happened instead was a long period of sustained economic growth, budget surpluses and an improvement of the trade deficit.LK (talk) 03:04, 13 November 2008 (UTC)

Please provide the exact cites for the Austrians who were predicting a "major economic crisis" in the early 1990s. The trade deficit didn't improve substantially. And budget surpluses came from capital gains (and other) taxes, parasitically living off a Ponzi scheme that was itself parastically living off unsustainable asset bubble after unsustainable asset bubble. It had to collapse once house prices collapsed. It was inherently unsustainable. And anyone or anything (especially any government or bank) that builds its business on a Ponzi scheme is plain dumb. The failure to predict something so obvious as a collapse of a Ponzi scheme cannot (unfortunately) be described in any other way.

Also, just out of interest, please list all the mainstreamers who predicted the current financial crisis and cite the publications. Not ONE mainstreamer that I know of (Krugman, the central bankers, government officials, academics who spend their LIVES studying this stuff) predicted anything like what we are experiencing. Anything. Like. It. Bernanke (who has a staff of several hundred "expert" economists) said the sub-prime crisis "was contained". Greenspan said in 2007 it wouldn't result in a major disruption (now he's SHOCKED!).

No doubt John Law derided the sceptics in Paris and argued his scheme was "innovative" (it certainly was!). That government sponsored Ponzi scheme went very well for a few years. All Ponzi schemes go well in the beginning. That is the very nature of a Ponzi scheme. And no one can predict the exact date a Ponzi scheme will collapse. It depends on how stupid the suckers are. But when the last sucker sobers up, all Hell breaks loose. And there is a limit to the number of suckers a Ponzi scheme can find. It always collapses. Always. And only the Austrians seemed to predict it this time around. Find me something you, or JQ, or any other mainstreamer wrote in 2003-2006 that came within 100 miles of the accuracy of the Landis piece and I will shut up. Until then, I will keep taking cheap shots at mainstreamers who come onto the Austrian talk page simply to talk negatively and who don't keep their focus on editing their mainstream pages. - Ron Paul...Ron Paul... (talk) 10:44, 17 November 2008 (UTC)

Good job!

This article was mentioned in this news article: [1] (MSNBC). DickClarkMises (talk) 04:06, 4 September 2008 (UTC)

Recent Agency Models

I've added this interesting piece into the references. If I read it correctly, the article is suggesting that equilibrium based models (prevalent in neo-Keynesian economics and neo-classical economics) do not capture the real dynamics of financial markets, and these more realistic, computer-based agency models do confirm at least some of the contentions of the Austrian School. Fascinating. Could someone please reference Thurner, Farmer and Geankoplos's work once it comes out. Thanks.-GoldbugVariations (talk) 13:15, 18 September 2008 (UTC)

Keeping here until consensus is reached over at WP:OR/N

Visionthing, do try to be civil. You edit summary is impolite. As you know, consensus was reached, unfortunately, it broke again as new editors weighed in. lk (talk) 03:07, 22 September 2008 (UTC)

Keeping edit here until consensus is reached:

The Austrian school's theory claims that business cycles are caused by central banks' manipulation of the money supply. However, researchers have found that economies have experienced less severe boom-bust cycles after World War II, since central banks have started using monetary policy to stabilize economies.

No offense, but your claim of consensus was pretty premature. I said it was original research; Doug Weller didn't really come down on any side, and Eubulides said it wasn't original research. I don't see how you got consensus out of that. Anyway, have you read the critiques of all the mainstream figures we've found? I haven't. That would be the best place to start. My Review of Austrian Economics subscription only goes back to 1997, so I haven't seen that full Tullock paper. If none of these guys mention this critique, you should perhaps wonder whether it is a fair criticism. II | (t - c) 03:48, 22 September 2008 (UTC)

I think the Tullock paper is available online. I've read the first few pages - seems pretty legit. (I didn't read the back and forth though.) Also Tullock is a very credible figure, have a look at his page on Wikipedia - very impressive. lk (talk) 07:33, 22 September 2008 (UTC)

Where is the paper available online? As far as Tullock, I'm not really impressed. He does not have a PhD in economics, just a JD. That's an advantage and a disadvantage. But the main thing is that he hasn't intensively studied macroeconomics. He's a public choice guy. Not the best guy to be commenting on this issue. I pointed to him because he's doing a scholarly critique. David Laidler is perhaps the most well-informed commenter, but he doesn't really come down negatively on the Austrian theory per se, and mainly discusses it in the historical context without aiming to critique it. 04:35, 27 September 2008 (UTC)

I think I found Tullock's paper from the journal website, or maybe SSRN or something like that. It's possible that it's only accessible from a university network that has paid for access. From what I remember the article used the same type of argumentation as is found in the better Austrian papers. Verbal logic, but clean and straightforward. lk (talk) 09:25, 27 September 2008 (UTC)

References

Speculation regarding motivation = Slur

David Laidler's (who is he?) speculations regarding the motivations behind the promotion of the theory are (1) irrelevant (2) inherently speculative (3) dangerously close to a slur. If someone suggested the present bailout of investment banks by the govt was "in part" motivated by Treasury officials having sexual relations with some bankers who would benefit from the bailout, this would rightly be considered an outrageous slur, and completely irrelevant to the substance of the bailout package. It is the intellectual equivalent of an ad hominem argument and shouldn't be included here, nor should this kind of speculation be added to any WP page (eg speculations regarding Keynesians being in bed with govt, Monetarists being in bed with the Fed etc etc). These are all ad hominem arguments amounting to slurs. I have removed them in keeping with LK's policy of "civility" on WP. - 202.6.153.120 (talk) 23:09, 22 September 2008 (UTC)

Copyvio

From the last paragraph in the "Theory" section:

Since it clearly takes very little time for the new money to filter down from business to factors of production, why don't all booms come quickly to an end?

This is a wholecloth rip from Murray Rothbard's America's Great Depression, as you can verify here. This sentence could probably be used as a quote, but it certainly shouldn't be uncited. It also makes me wonder how much of the article is plagiarized. DickClarkMises 21:17, 2 March 2007 (UTC)

plagiarism

This article has been plagiarized from an article at the Mises Institute website (especially the opening paragraph). See here. I am going to attempt to rewrite the article in order to make it not only respectful of copyright, but something resembling well-written. Life, Liberty, Property 02:20, 31 August 2007 (UTC)

Great, when are you going to start doing that? Four months later and it's still garbage. --76.224.69.130 (talk) 03:50, 24 November 2007 (UTC)

Just for starters...banks "make" money...really?

"When banks create new money, whether by printing bank notes or entering bank deposits..." Anybody want to clarify this with independent, third-party sources meeting WP:RS that define "printing bank notes" or "create new money"? Flowanda | Talk 01:05, 5 August 2008 (UTC)

Are you unfamiliar with the Federal Reserve System? The Federal Reserve is the central bank of the United States. I don't think anyone would seriously dispute that. DickClarkMises (talk) 06:10, 5 August 2008 (UTC)

While I hesitate to speak for Flowanda, it may make sense to clarify the different senses of "bank" and "money". Generally, only central banks print money, and private banks create a different kind of money than central banks. As written, the statement obfuscates more than it clarifies due to this conflation of different concepts.--Gregalton (talk) 13:31, 5 August 2008 (UTC)

Cleaner and meaner

I'd been meaning to get to this for a while. I finally got my teeth into this and chewed away for awhile. I hope you agree it's cleaner and sharper now, with an excellent, comprehensive, topical reference from Polliet included for good measure. This reference is the best "condensed" summation of ABCT I have found - other than this even better, wittier, pithier piece by the Famous Mogambo Guru. I'd add The Mogambo in, but I feel sure it would be deleted by WP guardians on the basis of The Mogambo not being a "reliable" source. —Preceding unsigned comment added by LetThemMintPaper (talk • contribs) 10:38, 2 September 2008 (UTC)

• Thanks for taking the time. It is a definite improvement. It's a tough theory to encapsulate in a concise way. --RayBirks (talk) 13:33, 2 September 2008 (UTC)

Origin of central banks and recessions

The United States didn't really have a central bank until the Federal Reserve around 1913. Yet there were vicious recessions and bubbles prior to then (see list of recessions in the United States). I'm guessing that Mises was aware of this, and had some sort of explanation. That would make this current article's lead misleading. But maybe he didn't? Can anyone shed some light on this issue? II | (t - c) 03:04, 16 September 2008 (UTC)

• I'm not sure if Mises himself was aware of the particulars of banking history in the United States. After arriving in the U.S. from Europe in 1940 at the age of 59, his first order of business was to write Human Action in English (based on a similar earlier German work) for its eventual publication in 1949. By then his student Murray Rothbard took on the task of studying American banking. His The Panic of 1819, America's Great Depression, and History of Money and Banking in the United States should explain just about everything you want to know. Part One of this last work has around 120 pages about the pre-Fed U.S. banking system, including the Bank of North America and the First and Second Banks of the United States, all of which functioned as early versions of central banks. The full PDF text of this last work is found here: http://www.mises.org/Books/historyofmoney.pdf . --RayBirks (talk) 04:09, 16 September 2008 (UTC)

Hey! Thanks so much for the prompt reply. I'm not sure I agree that those early banks would qualify as central banks. Did they act as lenders of last resort? Did they have exclusive control over the creation of banknotes? Were they able to flex the money supply and affect interest rates? I read a book recently which argued that they should not be considered central banks (Kicking Away the Ladder by Ha-Joon Chang). Without the ability to lower interest rates through artificially increased money supply, it seems as if these banks cannot be considered central banks for the purposes of Austrian theory. Thus a vicious business cycle existed before the central banks ... and it is a fact that recessions have become less common in the 20th century. I'll take a look at Rothbard's book, but I would appreciate it if you could give me a quick nutshell Austrian rebuttal. You know that Friedman and Bernanke believe that the Great Depression was caused the government not increasing (temporarily) the money supply enough in the wake of the stock market crash?

Anyway, the Tulip mania bubble certainly precedes central banking. Bubbles just happen. II | (t - c) 05:35, 16 September 2008 (UTC)

Its arguable if Tulip Mania actually was a significant bubble, but that's neither here nor there. I've written up a bit about crashes pre-WWII, and also added cites for economists who state that cycles damped down after central banks started getting involved.lk (talk) 07:26, 16 September 2008 (UTC)

Unfortunately, your sources don't directly make the point, meaning that you've synthesized to do original research. I'm not going to take 'em out, but it would be much better to find someone directly targeting the Austrian cycle with this point. II | (t - c) 07:29, 16 September 2008 (UTC)

I've edited the statement to make it clearer what the references do and don't say. I think this makes it one of the better cited statements in the article. lk (talk) 11:26, 16 September 2008 (UTC)

I checked your sources and they don't talk about the Austrian school. That means that you can't use them to criticize the Austrian school without breaking WP:OR. -- Vision Thing -- 18:36, 17 September 2008 (UTC)

That is not a reasonable argument. This is like reverting citations about satellites and circumnavigations on a page about flat earth theory because the writers did not directly try to refute the flat earth question. However they directly address the topic of whether the earth is round. Similarly, I believe this page can cite articles that are about Business Cycles, they do not have to be directly arguing against the Austrian business cycle theory. lk (talk) 05:32, 18 September 2008 (UTC)

Where in the "Flat earth" do you see a discussion about satellites and circumnavigations? WP:OR is clear on this: "If the sources cited do not explicitly reach the same conclusion, or if the sources cited are not directly related to the subject of the article, then the editor is engaged in original research." Subject of this article is "Austrian Business Cycle Theory" and you sources are not talking about it. -- Vision Thing -- 16:48, 18 September 2008 (UTC)

Sock puppeting through anonymous IPs

The use of anonymous IP socks to avoid bans and to back up each others arguments and revert avoiding 3RR is clearly prohibited. Edits by anonymous IPs that suddenly show up on this page evidencing knowledge of the arguments here and Wikipedia in general is prima facie evidence of sock puppetry. Edits by such socks are prima facie unwanted, as such, any user may revert these additions (see WP:BAN#Enforcement by reverting edits). lk (talk) 04:36, 23 September 2008 (UTC)

Badly expressed or beating a straw man

I'm fairly agnostic about “the” Austrian School theory of business cycles (to which, certainly, not all members of the Austrian School subscribe), but I want to note that this

The Austrian school's theory claims that business cycles are caused by central banks' manipulation of the money supply. However, researchers have found that economies have experienced less severe boom-bust cycles after World War II, since central banks have started using monetary policy to stabilize economies.[2]

is at least badly expressed, and may just be beating a straw man. As this passage now stands, it speaks merely to the objective of post-war manipulation. Rather obviously, not all manipulations are created equal, and different manipulations should be expected to have different effects when applied to otherwise identical economies. Also rather obviously, otherwise identical manipulations should be expected to have different effects when applied to otherwise different economies. So we want some appropriate standard against which we can say that post-war manipulation has been greater than or equal to that of pre-war manipulation. In the absence of such, the “However” is entirely misplaced, that which follows it simply without force. —SlamDiego_←T 16:04, 5 October 2008 (UTC)

Great Depression

Mark Skousen writes that: "During the 1920s, there was a school of economics that did predict a monetary crisis: specifically, the up and coming generation of Austrian economists, Ludwig von Mises and Friedrich Hayek. Mises and Hayek argued, contrary to Fisher, that monetary inflation and easy-money policies are inherently unstable and create structural imbalances in the economy that cannot last. […] When the dire predictions of Mises and Hayek came true in 1929-32, the economics profession paid attention." This is confirmed by The Royal Swedish Academy of Sciences when they say: "He tried to penetrate more deeply into the business cycle mechanism than was usual at that time. Perhaps, partly due to this more profound analysis, he was one of the few economists who gave warning of the possibility of a major economic crisis before the great crash came in the autumn of 1929." So please explain why is contentious to say that Mises and Hayek predicted the Great Depression. Also, Block and Barnett do not say that the ABCT was never discussed by mainstream economists. The ABCT was very much in spotlight during the Great Depression, and only with the rise of Keynesianism it fell out of the focus. -- Vision Thing -- 11:46, 26 October 2008 (UTC)

We cannot say that they predicted the Great Depression. We can say that people believe they did, or that they believe they did. I'll grant you that they predicted a financial crisis, sure, but whether they predicted the Great Depression is impossible to say -- especially since the consensus of mainstream economists is that the policies advocated by Austrians (tightening the supply of credit) actually caused the Great Depression. II | (t - c) 20:52, 29 October 2008 (UTC)

Ok, I suppose that saying that they predicted a "major economic crisis" would be a more correct way of presenting this. -- Vision Thing -- 18:14, 1 November 2008 (UTC)

If you predict a "major economic crisis", eventually one will happen. Doomsayers can always point to some prediction that they made correctly, but they don't mention those that they did not get right. Austrians also predicted a major economic crisis in the early 1990's following the easy money policies in 1989. What happened instead was a long period of sustained economic growth, budget surpluses and an improvement of the trade deficit.LK (talk) 03:04, 13 November 2008 (UTC)

Sraffa, Kaldor & Hayek

It's rather surprising that this article makes no mention of Sraffa and Kaldor, who convinced most of the profession (and Hayek) that Hayek's version of the Austrian Business cycle was completely wrong in 1932. James Haughton (talk) 22:32, 29 October 2008 (UTC)

Further research on ABCT

A good source to cite for arguments about the ABCT: Risk and Business Cycles: New and Old Austrian Perspectives
LK (talk) 04:49, 13 February 2009 (UTC)