When I mention the Austrian way, I'm talking about Hayek and Mises and their economic theories. And before you attack their character, Hayek was a Nobel Prize laureate. Their theories have proven correct in predicting outcomes of fiat currencies and the lengths that politicians will go to preserve fiat currencies, and all the consequences of currency debasement.
Right now, the world over, the single biggest root cause is too much debt in the financial system of almost every large bank and sovereign state. Not only that, but much of the debt is toxic debt worth a fraction of what the market would pay for it. This is the problem. Adding deficit spending, more debt, and printing money will not solve this problem. The only solution is debt repudiation, writedowns, defaults, bankruptcy. In other words, instead of fighting the recession, we need to let the free market work through this and put the pain on the bond holders, so they will strike deals with the debtors to get all of the debt written down to levels that allow for sustainable economic growth.
Instead, in the US, as in Europe, and Japan, all of the sovereign are printing money, rolling over bad debt into newly issued debt, and funding ongoing massive deficits with more debt. None of this will end well. Europe isn't do much different than what we're doing. At the end of the day, we're all going deeper into debt. The only difference is that the US and Japan can also print a hell of a lot of new currency. |
