In the press - the increasing relevence of ABC

• "I am surprised that your list of hypotheses on the causes of speculative booms did not include the theory of the business cycle first described by Ludwig von Mises and later elaborated by Friedrich von Hayek. According to this theory it is the artificial lowering of interest rates and creation of excess credit by a central bank’s monetary policy that causes investors to erroneously believe that economic conditions are better than they actually are, leading to an abundance of overconfidence. The excess amount of easy money causes prices of assets such as equities or property to increase, which reinforces speculative tendencies. A central banker’s manipulation of the price of money, ie, interest rates, is no more sound economic policy than any other form of central government planning." A letter By Richard Schwartz in The Economist
• "To the extent that this assessment has been made, it represents an important victory for a school of thought that has long hung on the margins of the economics discipline: the Austrian school of economics, whose most illustrious figures include the Nobel prize winning Friedrich von Hayek and Ludwig von Mises. Austrian economists hold that downturns are the inevitable aftermath of loose monetary policy, thus opposing explanations typically heard prior to the current crisis that attributed recessions to price shocks, underconsumption or central bank tightening of monetary policy" George Bragues in the Financial Post.
• "If I had to identify myself with someone, at this time it would have to be with Friedrich von Hayek who, talking about the business cycle, highlighted the fact that every artificial boom caused by the expansion of credit by banks works in the end against itself. Today in the philosophy of operating American financial institutions there are too many footprints of the Keynesian tradition of regulation, such as intervention for achieving - in effect - only temporary result." Polish Premier Donald Tusk, via Mises Institute
• "I am skeptical of the current fiat money world we now live in and I reject the profligate, debt-inducing, easy-money policies of the Federal Reserve under Alan Greenspan. In fact, for quite a number of years I have warned that this experiment of debt, easy money and fiat currency would end in disaster. And so it has." Although in this post Edward Harrison is criticising the Austrian school
• "Hayek, who famously debated Keynes in a series of articles after the release of "General Theory," gave what I believe to be the most devastating critique of government action to stimulate "aggregate demand." Hayek viewed the boom and bust of the business cycle as primarily a monetary phenomenon created by governments' artificial inflation of money and credit." Dick Armey in the Washington Post
• "The stimulus package, focused on government spending and disguising income transfers as tax cuts, will make things worse rather than better.  It will delay and make more severe the market’s redirection of resources. In addition it will lead to a smaller capital stock and inflation. There are only three ways to fund the $827 billion -- cut other spending, increase taxes, or borrow.  Clearly the government’s intent is to borrow the money, and this will cause a drag on the economy rather than improve it." HumanEvents.com, Gary Wolfram 02/09/2009
• "Austrian economists tend to emphasize a laissez-faire approach and entrepreneurship (not the most popular policies at this moment) and strict limits on money supply growth, usually by hitching the currency to the gold standard.

  While considered outside the mainstream, the Austrian School is far more respectable, counting in its ranks two Nobel Prize winners, Friedrich Hayek and James Buchanan. Peter Schiff of Euro Pacific Capital — an adviser to the libertarian presidential candidate Ron Paul and one of the most prominent doomsayers in the current collapse — also subscribes to its theories.

  Hayek is said to have successfully predicted the Great Depression and some Austrian School devotees are taking credit for calling this one. “The financial meltdown the economists of the Austrian School predicted has arrived,” Mr. Paul wrote in September, 11 days after Lehman Brothers filed for bankruptcy. Kyle Crichton, New York Times

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