KT,
>I'm just wondering if anyone in history ever gave the Austrian School a try in the real world.<
It would not only require a hard currency, something like the gold standard, but ALSO the elimination of fractional reserve banking. I do not believe there is any modern example of both of those.
Without both, the excesses can always get large enough to prevent a politically acceptable liquidation.
In 29, we had gold, but "with" fractional reserves and paper too.
IMO, the real political challenge is not in convincing a democracy how to cope with the liquidation of excesses. IMO the excesses would always be tolerable if we really had sound money.
The political problem is in teaching the public how excesses actually form and who really benefits and who gets hurt when you inflate, socialize banking risks, and have fractional reserve banking.
Wall St and the Federal government will never give up a system that allows them to transfer wealth from from Main St to themselves via the backdoor.
Politicians would rather inflate than raise taxes.
Bankers like to lend money they don't have and then get bailed out.
Wall ST likes Nasdaq 5000, good deals, bad deals, any deals, bailouts, commissions, IPOs at 10,000 times earnings, rape and pillage etc... IN other words, excesses are good for Wall St. They make a ton of money, give themselves bonuses and then who cares. Just blame someone or something else.
The Austrians want gold to anchor the system. I believe there ARE problems with gold, so I would prefer another anchor. I just can't come up with a better alternative. |
