Very informative, and helps me go in the the right direction. So then I am incorrect in drawing the distinction, even though there are parallels, between 'unfettered capitalism' and 'regulated capitalism'. By what you say, the Austrians want government regulation to protect all industry from monopoly (which is a natural consequence of Darwinistic achievement at the top within capitalism) or unruly militaristic perpetuation of that power yet want markets that are free. Austrians want a very specific capitalism with a low barrier of entry to take place, viewing that as best. Besides that, they want government out. I'm reading about anarcho-capitalism and see a blaring question unanswered: how the hell does a completely privately regulated system address the very natural human formation of monopoly? By default, those that attain monopoly power would perpetuate their own power by privately outfunding everyone else. We see an analog in lobbyist corruption in government. Is anarcho-capitalism universally accepted as a defacto part of Austrian theory? Seems broken from the start in that way. About money supply -- to keep a stable price level today and go away from the banking power, to actually convert over to some sort of commodity backed currency, we would in actuality need to print (and procure equal gold or whatever commodity you pick) a crapload of money, to offset supply lost from removal of the fractional reserve system. So if monetary base = 1.5T, with an average 10% banking multiplier, I assume we'd need to 'print' another 14T and offset that with equal gold reserves just to prevent a collapse or major deflationary dislocations. At $800/oz, that would be 17.5B ounces of gold, or 550 thousand tons (if I've converted right). That pales in comparison to the view of all gold ever mined at 145000 tons. With the US only holding 8133 tons (take a look at wikipedia gold reserves). That means gold would be fundamentally poised to go up in value 67x ($53600/oz), and ironically the banks who happen to hold the reserves would yet again be rewarded. Those who do not would be left with relatively nothing. Anyone not holding physical would be wiped. Furthermore, we would arbitrarily be empowering gold producer countries just as we do oil producer countries today. South Africa and Peru would become some of the wealthiest places in the world, with the rest of the more developed world falling quickly behind ... So yet another irony, moving back to a gold standard would facilitate inequities that would probably just piss off another group (those not holding gold, which is most of society). These are just some ideas. It just seems like the dislocation would be so entirely large that it would be chaos-inspiring. Do any of these Ron Paul-ites actually think through the situation? Maybe what they want is a hand-out of their own, and they can't help but aimlessly focus their frustration on not being a direct beneficiary to the present cartel. Calling it as I see it, this whole approach is so entirely flawed, it appears to be more a function of wealth and idealogical dissent than actual logic. They want a perfect capitalism where everyone gets a fair shot, sans monopoly/dictatorship, but yet they don't want to deal with the very real problems that moving to a gold standard would cause. They believe private self regulation is possible to achieve this (I dealt with this as flawed as above) etc etc. In essence, it appears to me they are socialists in disguise (since they want a more equal distribution of wealth throughout society, where bankers don't hoard). Yet another irony considering Hayek spends so much time criticizing socialism and central planning as broken. So many logical holes in this thing. It's a swiss cheese idealogy.
No, it's based on history. And if you look deeper, past the Tulip mania, you will find some very interesting stories of certain individuals showing up in towns & villages, setting up shop, getting into the credit game, blowing it up, then contracting it and then being lyunched or run out of town. Booms & busts are limited if there is no excessive credit.
A land value tax would prove a disincentive to bid the price up and would have the benefit of the abolition of all other taxes including income tax. http://en.wikipedia.org/wiki/Land_value_tax
One of the main theories of austrians is that the gold standard is better because government doesn't intervene in the money supply and that will prevent bad things. Well in the great depression the Fed hoarded gold instead of allowing it to flow to the banking system and increase the money supply, that lead to massive bank failures, a severe contraction and a multi-decade bull market in the wellfare state. fiat system of printing 3% more dollars a year has no disvantages to gold, either way you need the government behave to prevent harm from being done(Then Roosevelt devalued the dollar against gold, so the government can intervene just as often) a Gold standard would work in a world where government is small and debt levels are low, but thats not the world anymore but the Austrians are too damn frekking biased to admit that, 'rothbard could be wrong?no way'
It could work VERY well in small gold mine owning countries to stabilize their economies and basically hedge their buying power while the rest of the world is inflating. But not practical for anyone large and developed.
Austrian school is discounted because it is just a philosophy that provides no quantitative basis other than its fundamental premise that government should not interfere with the economy. Which presupposes of course an economy in the first place that already functions well. The real paradox is that they do not tell you how to reach an initial condition where you need to aplly no more intervention. People should understand that economics and politics cannot be completely decoupled and whoever thinks there can be an economic theory or policy that is not founded on some kind of political ideology is a fool.
First they ignored Austrian Economics. Then, after the utter failure of Keynesianism and Monetarism, their leading practitioners leading the world economy to the current mess, they can no longer ignore Austrians. Therefore, they are now attacking them. Instead of attacking Austrians, Keynesians and Monetarist must show alternatives, but wait, we already know what they are: zero interest rates, bailouts .....
I'm not attacking. Look at achilles' reply. He gives an intelligent answer to some of my questions without knocking it. But it seems 98% of people backing the Austrian methodology are not interested in debating the specific points I bring up. I actually think this possibly reveals they've never taken the time to scrutizine the ideals. It seems to be a haven for zealots and fanatics judging by their responses. They are dismissive, instead, pointing blame in vague manners, etc etc. I'm not interested in that sort of discussion. It is like trying to argue the merits of evolution with a creationist. The creationist usually ends up justifying faith as his foundation. Judging by most responses here, faith appears to be the same foundation. Of course, that says as much about its followers as it does about the ideaology. I have no problem conceding certain weaknesses and failures in Keynesian and monetaristic approaches, but the Austrian solution doesn't seem so great either (consequences), and has some blatant logical errors (as I've pointed out here) that bring it down.
So according to you, Keynesianism and Monetarism have "certain weaknesses and failures" but they are not enough to discredit them. But Austrians; "logical weaknesses" (not real, actually made up by yourself) are enough to "bring it down". Thanks for showing us your bias. You pretend to be rational and open to discussion, but you are the real ideological zealot. The Scientific Method says that theories must be tested by their predictions: did textbook Keynesianism predict the current crisis? No. Did textbook monetarism? No. Did textbook Austrians? YES!!! You are just bullshitting us.
Cause under Austrian methodologies, you can't make unlimited riches via being a money changer. You actually have to work for it. And if you do finance & trading type activities, it is due to it being needed, not due to excess of credit.