The Wall Street Journal ‘s David Wessel revealed the Fed’s strategy for dealing with an economic downturn in its August 3, 1998, edition: “The challenge for policy makers today isn’t how to respond to a stock-market crash, if one occurs. They know what to do; the lessons of ‘29 and ‘87 have been well-studied. The Fed would flood the economy with
Letter to the Editor The Wall Street Journal September 4, 1998 Uncanny Parallels Between ‘20s and ‘90s James Grant’s (”The Coming Bust,” editorial page, Aug. 28) debunking of the Pollyanna-like forecasts of economists and Wall Street gurus was right on target, especially the reference to Austrian business-cycle theory showing that central bank
Murray Rothbard called the central puzzle of the business cycle the “cluster of entrepreneurial error.” During the boom, most entrepreneurs and investors appear to be geniuses, earning extraordinary profits year after year. During the bust, their fortunes are suddenly reversed, and they seem like dunces and suffer losses year after year.
Mark Thornton, adjunct scholar on the Mises Institute and economic advisor to the Office of the Governor, Alabama, writes the following response to an editorial in the Investor’s Business Daily on Japan. IBD correctly argued, with regard to Japan’s economic problems, that flooding the market with newly credited money is no solution. However, in
Milton Friedman, interviewed in Barron’s (August 24, 1998), was asked: Q: You were acquainted with the Austrian economist Friedrich Hayek and also are familiar with the work of Ludwig von Mises and his American disciple, Murray Rothbard. When you were talking about bad investments, you were alluding to Austrian business-cycle theory. There is a
The failure of a major hedge fund, in concert with the lingering shrinkage of Asian markets and the further slide of Russians into corruption and chaos, is ripe for the symbolic pickings. The anti-capitalist crowd, the people who never respected the market, has found their whipping boy. After spending the last two decades downtrodden by the
The Fed may be preparing to adopt exactly the wrong policy in response to falling stock prices, recessionary fears, and collapsed world currencies. Instead of allowing a much-needed market correction to run its course, it may attempt to head it off by driving interest rates lower. Some financial pundits even suggest the Fed should intervene to
In his speech on the world economy before the Council on Foreign Relations, President Clinton said that the most pressing problem facing us is global “financial turmoil.” But his solutions take us entirely in the wrong direction. He recommends more IMF funding, more environmental and labor regulations, and a new international conference to create
Speaking to the Council on Foreign Relations, President Clinton proposed more spending, regulating, and monetary manipulation as the keys to fixing up the world economy. More ominously, he called for the creation of a new international financial “architecture,” which, he implied, would be a permanent bailout fund for deadbeat governments the world
Paul Krugman smears with a broad brush when he condemns the Austrian theory of the business cycle as the “hangover theory” ( Slate , December 3, 1998). Does he intend to reject wholesale the idea that artificial booms (and drinking binges) lead to busts (and hangovers)? If so, he condemns much more than the Austrian theory of boom and bust.
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.