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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: sjemmeri who wrote (87398)	12/21/2000 7:02:13 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

steve, Austrian economics is a school of thought whose founders happened to be of German and Austrian origin and pre- dates Europes move to socialism I suppose ( late 1800's) . They advocate laissez-fare policies and free markets. Austrian economics offered a sound explanation for the Great Depression -they anticipated it but fell out of favor because the people wanted the government to do something about the economy not realizing that the Fed's easy money policies ( gov't intervention) played a major role and creating the 20's bubble.the Austrians believe that the negative wealth effect of the stock market collapse was the main cause of the Great Depression. mike

To: sjemmeri who wrote (87398)	12/21/2000 11:04:30 PM
From: Freedom Fighter	Read Replies (3) \| Respond to of 132070

Steve, If you want to sum up the differences between Austrian economists and the mainstream it really comes down to the monetary system. The mainstream believes that the Fed is there to prevent the excesses of capitalism from causing a severe business contraction and all the political risks that would entail. Austrians believe that unsound monetary systems cause the excesses and the Federal Reserve System falls into that broad category. It has apparently been extremely difficult for society to come up with a system of increasing the money supply and credit that is in sync with economic activity and savings. We have faulty stats and very subjective ideas about economics to being with. It is those things that contribute to money being too easy or too tight - which then leads to economic miscalculation, a huge supply of capital to fund greed that doesn't come from savings, etc.... and ultimately boom and bust. In theory, Gold has some advantages over the VERY LONG TERM. However, we were never really on a true gold standard to begin with because we always had fractional reserve banking. The second problem was the occasional huge gold strikes or gold draughts etc... that lead to the supply of gold not matching economic activity at all in the short term. I side with the Austrian explanation of the business cycle. In fact, I think it's so obvious they are right on this issue that I can't understand what all these supposed mainstream PHDs are thinking about. It's like 1 + 1 = 2 to me. I part ways with the Austrians on gold even though I understand their view. There are flaws with gold backing the money too. I'm not sure what the solution is, but I am very confident I understand the problem. Wayne