Tuesday, September 27, 2011

Austrians vs. the Mainstream, Then and Now

Mainstream 16.10.1929: "Stocks have reached what looks like a permanently high plateau." - Irving Fisher, celebrated neoclassical economist

Austrians 02.1929: "The boom will collapse within a few months." - Friedrich von Hayek, Austrian Institute of Economic Research

Mainstream 20.10.2005: "House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas." - Ben Shalom Bernanke, future FED chairman

Austrians 06.04.2004: "Higher price inflation should not have been a surprise given that the Fed has increased the money supply by 25% during the period 2001–2003. (...) Given the government's encouragement of lax lending practices, home prices could crash, bankruptcies would increase, and financial companies, including the government-sponsored mortgage companies, might require another taxpayer bailout." - Mark Thornton, Mises Institute

Avoid BS. Learn good stuff.


  1. "A great crash is coming, and I don’t want my name in any way connected with it" -- Ludwig von Mises, April 1929, in a letter to his wife explaining why he was turning down a lucrative banking job.

  2. That one is very telling too. I did not include it only because it is an oral statement reported by Machlup rather than part of a written analysis similar to that of Hayek's.

  3. Austrian: "Austerity measures and a bailout will lead to hyper-inflation"
    Mainstream: "The USD is one of the most stable currencies"