James Grant writes in the New York Times today, on cue as the housing sector bust continues. He seems to be the guy that the editors call whenever there is a downturn in the market. And every time he writes a variation on the Austrian theme that it all comes down to credit cycles generated by the central bank, which is forever attempting to gin up prosperity out the printing — an attempt, he points out, that is ill-fated in every way.
“Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich. In any case, to all of us, rich and poor alike, the Fed owes a pledge that it will do what it can and not do what it can’t. High on the list of things that no human agency can, or should, attempt is manipulating prices to achieve a more stable and prosperous economy. Jiggling its interest rate, the Fed can impose the appearance of stability today, but only at the cost of instability tomorrow.”
Grant’s key influence in life is not so much Mises or Rothbard but Roeopke and, in particular, his book Crisis and Cycles, which is not perfect in every way but a very good presentation of the Austrian theory.
What I find particularly striking is how Grant manages to write for this venue in a way that makes his analysis have the feel of being very mainstream, though its radicalism is just beneath the surface. Maybe the editors are too ill-read to know what’s what or maybe he is just so darn talented that he can manage to pull it off in way that the editors are too impressed to say no. In any case, it is quite a prize for Austrians that the nation’s leading newspaper has made an Austrian the official commentator on all issues of financial cycles. They keeping alive a tradition that began with Henry Hazlitt at the NYT and probably don’t know it.
