Destroying Value

In Cleveland and other American cities homes are being demolished because five years after the housing bust there is nothing better to do with them. Therein lies a lesson in Austrian business cycle theory. In a world of uncertainty, waste—the destruction of value—is inevitable. Human action, which aims to replace inferior circumstances with superior circumstances, [...]

Hayek Unsung

George Selgin brings to our attention this New York Times article highlighting the unorthodox views of Thomas M. Hoenig, the outgoing president of the Federal Reserve Bank of Kansas City. As Selgin notes, the article contains this: “The central bank has to be, in a way, a neutral player, and yet we find ourselves trying [...]

And the Slump Goes On

Official economic statistics and the underlying economic reality sometimes differ starkly. Such discrepancies may be almost inevitable when a small group of macroeconomic experts sets the official dates for peaks and troughs of aggregate economic activity. The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) recently “determined that a trough in [...]

What’s Missing from this Picture?

Washington Post economics columnist Robert Samuelson wrote last week: [T]he [economic] crisis has also battered the logic of all major theories: Keynesianism, monetarism and “rational expectations.” Economics has become the shaky science; its intellectual chaos provides context for today’s policy disputes at home and abroad. Nowhere does he mention Austrian economics. Had he been familiar [...]

Does Malinvestment Matter?

With literally trillions of dollars having been spent for “stimulus,” the rate of unemployment hovers around 10 percent, many banks remain in a precarious state, and a meaningful economic recovery is as elusive as ever.

It's About Time!

The Wall Street Journal‘s news staff doesn’t yet realize the economy consists of a temporal structure of production: Americans are saving more of their paychecks than at any time since February 1995, a shift toward thrift that could prolong the recession but strengthen the financial health of U.S. households and the overall economy if it [...]

The Freeman, May 2009

Bottom Line

[T]here is no way for government macroeconomic policy to correct an incorrect perception of how [savings/consumption] plans have changed. There is no way for government to acquire the knowledge necessary to be able to coordinate individual plans. Such information simply does not exist. If it is going to ever exist it will be generated by [...]