Salon: All Would Be Chaos Without Fed

We’re going to see more and more dismissals of the Austrian School like this one, written by an author who describes himself as ” a technology reporter, editor and blogger.” Since he writes for Salon, though, he is entitled to an opinion on things he has read nothing about.

(His views, I add without really needing to, are reliably conventional. He wrote in another column that cutting government spending makes a recession worse. Keynesians like him made all kinds of dire predictions about what would happen when WWII spending was discontinued. As sensible people predicted, production records were set. You will not be surprised to learn that this does not deter our writer.)

The article gives us one quotation from Mises (which, I admit, is one more than we usually get), in no way explained or elaborated on, to the effect that if you want to cure a depression, avoid manipulating interest rates, wage rates, or commodity prices. This is supposed to horrify us, I suppose, in its dogmatism. Don’t we know that our leaders are supposed to set all so-called economic laws at naught, and override the interest rates, wage rates, and commodity prices that result from the voluntary actions of hundreds of millions of individuals?

Naturally, it is not to the author’s purpose in his discussion of depressions to disclose to us that Mises, unlike the celebrated Irving Fisher, had predicted the Great Depression at a time when respectable opinion — to which our author obliviously appeals today, when that same respectable opinion was just as clueless as before — said things were fine; stock prices had reached “a permanently high plateau,” Fisher memorably said on October 17, 1929. Were our author to mention this, it might make the curious reader — a rarity at Salon, I know — wonder if Mises might have something useful to say after all.

David Stockman has made quick work of the “things would have collapsed if our overlords hadn’t intervened” argument for TARP. I have dealt with the “there were business cycles before the Fed, after all” argument numerous times (here’s just one), and there is additional material on this in Rollback, my latest. Let’s master this material so authors like this can be appropriately slapped around in comments sections around the world.

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9:59 am on May 12, 2011