> I decided to actually read about this "Austrian economics" nonsense.
The Austrians are too doctrinaire for my taste. They do have some good insights that have been ignored by the mainstream. For example, the idea that cheep Central Bank credit leads to boom/bust economic cycles has gained a lot of mindshare in the wake of the mortgage mess. However, they tend to close their minds to cool ideas from other schools of thought.
> However, they tend to close their minds to cool ideas from other schools of thought.
That they definitely do. They reject positivism as an approach to economics on the basis that you can't do repeatable experiments with entire societies, preferring a deductive approach that yields statements that are correct but weak. But as a result, they miss out on theories that aren't quite rigorous but nonetheless have good (but imperfect) predictive value.
The trouble is, cheap central bank credit also led to the Great Depression and the 1970's stagflation, yet no one seems to learn the lesson. Perhaps that's why Austrians tend to sound like a broken record. I think the reason no one learns the lesson is that cheap credit is just too tempting for politicians ( and the people that vote for them). It seems like a free lunch - until the malinvestment piles up and the credit pyramid starts to topple.
The three biggest economic issues today are:
1) the stagnation of the American standard living since 1970
2) the massive trade deficit and the hollowing of the American economy
3) the financial crisis
All three of these problems are related to fiat currency, maturity mismatching, and inflationary policies by various banks. That's why I think the Austrians, while not perfect, are much closer to the truth than the other economic schools.
The Austrians are too doctrinaire for my taste. They do have some good insights that have been ignored by the mainstream. For example, the idea that cheep Central Bank credit leads to boom/bust economic cycles has gained a lot of mindshare in the wake of the mortgage mess. However, they tend to close their minds to cool ideas from other schools of thought.