Generally the only significant disagreement I have with Austrians relates to Rothbards hostility to fractional reserve banking.

Well this thread should go for a few hundred more comments now….

You are probably right that this is not a fair assesment of Austrians. It is a misrepresentation of Austrian thinking and whilst I some times notice malinvestment spoken of as a primary cause it probably has more to do with sloppy language than a fundamentally flawed outlook.

Generally the only significant disagreement I have with Austrians relates to Rothbards hostility to fractional reserve banking. The only way I could object to fractional reserve banking would be if banks claimed to be keeping the cash in a private vault allocated to the deposit holder. Almost everybody I know is aware of the fact that banks take the money invested by people through demand accounts and invests it through lending. And I have never seen a bank claim otherwise.

I think that Austrian economics is more theoretical and supply-side economics more operational. Austrians seem to be more normative and supply-side more descriptive of what is. Ironically that is not how the media paints the picture.

I think few of the differences are necessarily fundamental. Supply-side has many more differences with the likes of monetarism or keynesianism than it does with the Austrian school of thought. Although obviously on most issues you can always find people from other schools of thought that you disagree with.

To me it is like the Austrians are usually talking about what shape the lego blocks of liberty should be, whilst supply side is looking at what the impact is of current lego structures. It’s a bottom up versus a top down analysis with a lot of cross over.

Regards,
Terje.

Who?

No Austrians surely.

[EDIT BY ADMIN - I, GRAEME BIRD, WILL BE FORCED TO APOLOGISE TO FDB BY HAVING THIS COMMENT FORCIBLY INSERTED IN ALL OR MOST OF MY COMMENTS UNTIL I VOLUNTARILY RETRACT OR APOLOGISE TO FDB FOR MY VILE COMMENT ON THE GAIDAR THREAD]

Please restate the EURO questions that you think are significant and that you think I have not addressed adequately.

Regards,
Terje.

Most of the disagreement between supply-side and the Austrians is mostly related to Rothbard not Mises. And supply-siders claim Mises as one of their own anyway. They also claim Adam Smith and Karl Marx. Essentially they can claim such diverse personalities because supply-side is firstly a descriptive rather than normative model of the world and all these authors assume the key assumptions of the supply-side model. Keynes doesn’t fit which shouldn’t surprise because supply-side was really a response to all the things that were wrong with the Keynesian outlook. Although even Keynes himself said some pretty supply-side type things (that were mostly ignored by his followers).

I think that I don’t have too much problem with the malinventment concept except in so far as people try to describe it as having causative properties in relation to monetary events. The misallocation of investment is a symptom of monetary instability and not a cause. It is like saying that inflation is caused by a wage-price spiral when clearly the wage-price spiral is the result of inflation not the cause.

I am happy enough to concede that if you have several years of high inflation followed by several years of high deflation things are going to be much worse than if you have several years of stability followed by several years of deflation.

High inflation followed by high deflation is essentially what happened when in 1925 Churchill imposed a deflation on the British Commonwealth following the inflation that happened in WWI. Both were entirely monetary processes brought on by first ending the gold standard (WWI) then returning to it it at a very deflationary price level (1925).

Regards,
Terje.

Supply side economics does not advocate resource mispricing. I don’t see any disagreement.

I’ll try and dig out up the Euro questions tomorrow. Feel free to restate them in point form if you think it will move us forward quicker.

Point 83. Agree for the most part.

Point 85 Agree for the most part.

Point 86 Disagree

Japan ran a monetary expansion for the good part of the 80’s. An easy money policy causing the largest distortion is world history.
For example the emperor’s place was at one stage worth more than the state of California.

The final manifestion was a large correction in asset prices as ra result of terrible policy managment and finally a deflationary spiral in asset prices.

point 87 i was kidding.

I n any event I elft you some questions to answer about the Euro that you seemed to have glossed over.