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by lyudmil 4912 days ago
Completely agree. If Paul Krugman isn't enough to sway people, Joseph Stiglitz, another Nobel laureate, has echoed his analysis. So has Dean Baker, who is the first economist to my knowledge to predict the housing bubble and the resulting crisis. Basically, this was easy to see and well-known to economists that aren't neo-liberal demagogs.
1 comments
joslin01 4912 days ago
About the entire Austrian economics school predicted the housing bubble. Peter Schiff is famous for getting blasted on TV about it. Krugman, on the other hand, was calling for another bubble like the housing bubble: http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip...

I find it funny when Keynesians talk about bubbles. What do you think happens when you set interest rates absurdly low? You could make the argument it stimulates the economy, sure, but at what cost?

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gph1 4912 days ago
No doubt that Austrian's avoided some of the neoclassical blind spots that caused many economists to miss the crisis, but then again Austrian's are always predicting crises and they certainly offer no crystal ball--see Peter Schiff's hilarious prediction of soaring inflation every year since 2009.

Schiff's misfire is especially relevant to this discussion, because it demonstrates the Austrian school's grossly flawed understanding of public finance and our monetary system (despite having valuable things to say at times).

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hazov 4912 days ago
Schiff also predicted a hyperinflation that never came, actually he just repeated what Rothbard said in some books. He was wrong when he wrote that and still remains wrong, maybe sometime in the eternity he will be right.

Actually for me from the point of view of Mises and his praxeology everyone who uses his methodology to advise a policy is just guessing and expecting that his views are coherent with reality.[1]

Austrian school is very deep, and not a monolithic bloc like mises.org loves to say, there were Austrian economists who were not Mises and disagreed with his methodology, including Machlup and Wieser who were Mises student and teacher respectively.

[1]: More of that in here: http://mises.org/mofase/ch4.asp It's just my interpretation of his view.

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lyudmil 4912 days ago
I don't think I follow. Isn't the idea that you weigh the cost of doing so with the cost of a prolonged recession? I have a general ignorance of exactly what Keynesian economics actually means, but from what I gather, it's not one thing.
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