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Friday, May 15, 2009

Ron Paul has a good discussion on Morning Joe

Worth watching. It's good to see someone out there explaining sound economics. Ron Paul was not a "prophet" as Scarborough suggests, there were many people (especially economists influenced by Mises and Hayek's thinking on business cycles) who saw the trend and knew what was going to happen to the economy--now those free-market economists are speaking out against the crude Keynesianism that's evidently dominant among the self-proclaimed intelligentsia.

What the heck is Ron Paul talking about when he goes on about the Austrian theory of the business cycle? Let's hear it from the Royal Swedish Academy of Sciences announcing the 1974 Nobel Memorial Prize in Economics:

von Hayek's contributions in the field of economic theory are both profound and original. His scientific books and articles in the twenties and thirties aroused widespread and lively debate. Particularly, his theory of business cycles and his conception of the effects of monetary and credit policies attracted attention and evoked animated discussion. 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.

von Hayek showed how monetary expansion, accompanied by lending which exceeded the rate of voluntary saving, could lead to a misallocation of resources, particularly affecting the structure of capital. This type of business cycle theory with links to monetary expansion has fundamental features in common with the postwar monetary discussion.

(h/t Lew)

Posted by Kalim Kassam on May 15, 2009 in U.S. politics | Permalink


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