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A Lesson in Austrian School Economics for a Morgan Stanley V.P.by
Gary North
David Bahnsen Dear Mr. Bahnsen: I am writing this in response to your article, published on December 12, 2005, which was critical of Austrian School economics. You said at the time, correctly, that Austrian School economists were highly skeptical of the American stock market, given Alan Greenspan's policies as Chairman of the Federal Reserve System. You then quoted several paragraphs by Mr. Greenspan proving that Greenspan was an advocate of free markets. This article was a follow-up to your article of October 24, "The Streak Goes On," in which you had kind words for President Bush's appointees, most notably Ben Bernanke. You wrote:
First, Dr. Bernanke is, was, and always has been a Keynesian. He made a positive reference to Friedman with respect to Friedman's almost universally accepted thesis that the cause of the Great Depression was the Federal Reserve System's refusal to inflate the money supply, 1930–33. Keynesians have long applauded this thesis. Dr. Bernanke's recent decisions as Chairman prove his commitment to Keynesianism. There is no Friedmanian 3% per annum constant growth in the money supply. There was a 100% increase in the monetary base in the last three months of 2008 – the highest and fastest in history.
March 3, 2009 Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible. Copyright © 2009 Gary North.
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Now,
this morning, President Bush has pushed his streak yet another
notch further with the apparent appointment of Ben Bernanke to
serve as the next Federal Reserve Chairman ... The Wall Street
Journal and NBC News have confirmed that President Bush will
be make this announcement this morning, and supply-siders like
myself can barely contain their excitement ... Dr. Bernanke will
have big shoes to fill (Alan Greenspan has served as chairman
since 1987, covering all or part of six presidential terms along
the way), though he surely is up for the task. A much more reliable
deficit hawk than our own President, and his predecessor, Dr.
Bernanke is a Chicago-school economist through and through, carrying
on the tradition of the great Reagan team of the 1980's (think
Laffer, Kudlow, Bartley, etc.). A graduate of Harvard College,
and MIT (Ph.D), he has served a professor at Princeton University,
a federal reserve governor, and recently the chairman of President
Bush's Council of Economic Advisors. 