From: C
Sent: Monday, March 11, 2019 5:07 PM
To: [email protected]
Subject: your missive last week….

Hello Walter,

Until last week, I have always been on the same page with you, understanding your responses to the inquiries you receive on anarchism, libertarian thought, and, of course, Austrian economics.

I’d like to reference an email you sent out last week…. , I recall that your questioner was sparring with an Austrian non-believer over QE. I remember the topic, because for a long time, the issue was also on my radar. Specifically, your questioner needed a solid response (so that he could head off a question) as to WHY, with all the QE since 2008, has price inflation NOT kicked in massively?

I read your answer (please review it again before responding to me) and for the first time, I was NOT satisfied with a “Block” response.  Not that you were evasive, but your response was not to the point – it was way too general, having to do with preferences of the public possibly delaying or countering price inflation.  It really didn’t explain anything and certainly had NO DETAILS as to “why inflation hasn’t kicked in?”  Yes, I know you provided reading references as usual, but your response just didn’t work. I felt like I was left hanging. Can you please try again?

Best regards and keep up the good work you do, C

Dear C:

In the real world, we are denied ceteris paribus conditions. Austrian only predict theoretically, not practically, empirically, as a result. All we can say is that thanks to QE, prices are now higher than they otherwise would have been. This is a contrary to fact conditional. It is not falsifiable. It is not testable. It is a synthetic apriori claim, based on logical alone. Austrians are not logical positivists. Yet, this claim makes sense of what is going on in the real world.

The point is, during the time of QE, other things might also have occurred that would reduce prices compared to what they would have been. For example, people could have increased their cash balances, stuck more of their money under their mattresses than before, which would tend to lower prices. When coupled with that sort of thing, QE’s ability to raise prices would have been truncated.

Let me try again. If a frost occurs, and half the oranges are destroyed, then, ceteris paribus, prices will rise. But, suppose during this time, people’s demand for oranges falls, exogenously. Then, the price or oranges will not rise, at least not as much, had this change in tastes not occurred. All we can say, as Austrian economists, is that when a frost kills half the orange crop, not that prices of oranges will necessarily rise, but that they will be higher than they otherwise would have been, had no frost occurred.

I hope this helps.

The Best of Walter E. Block