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The author at Conjectures and Refutations in a related article titled The Marginal Futility of Austrian Economists writes:
COMMENTS (8 to date)
Mark writes:
I think H2 is definitely part of the answer. The most important single contribution from the Austrians, to my mind, is clearly Hayek's work on the coordination process and the role of the price system thereinas summed up in several of the papers found in Individualism and Economic Order. That work in turn flowed out of the socialist calculation debate he engaged in with Lange and othersthis was the big debate of the 1930's and '40's that he won. That work is clearly something that has been "incorporated into the mainstream." But I also think H1 is part of the answer. Austrian trade cycle theory, for example, is extremely limited in its explanatory power (as is any other theory which attempts to explain all fluctuations as flowing from a single cause). Posted September 23, 2005 4:48 PM
Craig writes:
H4 strikes me. According to the Austrians, government fiscal deficits will cause interest rates to rise. When they don't rise, the answer is that they should have and absolutely must. Any philosophy that ignores conflicting empirical observations (time after time after time,) should be questioned. But the Austrians insist that the logic of their arguments overrides the realworld results. Posted September 23, 2005 7:04 PM
Ruth writes:
Agree with Craig. Also your comment "When someone agrees with many but not all Austrian ideas, many Austrian economists think that this deserves not encouragement but denunciation. You don't get a seat at the table that way." This attitude in endemic in libertarian circles. I am in the category you mention, and others have come after me like a pack of hounds on more than one occasion. How to win friends and influence people it is not. Posted September 23, 2005 9:49 PM
Peter Boettke writes:
Dear Arnold, Please note that the entry you comment on from The Austrian Economists was written by my colleague Frederic Sautet and not by myself. My view is more aggressive than Frederic and that is that we should not wait for an invitation, but just crash the party. In fact, some of us already have  at least on some important margins in our profession. Peter Boettke Posted September 23, 2005 9:53 PM
James writes:
How is the budget deficit / interest rate connection exclusively Austrian? When I took macro from a Keynesian, we learned that a budget deficit in times of full employment will result in increasing interest rates. This implies a change in the ISLM geometry and an accompanying increase in interest rates. If the Fed is committed to an interest rate target, it will increase the money supply. When I took monetary economics from an Austrian, we learned that if the Fed is committed to an interest rate target, deficit spending is effectively an increased demand for credit. In order to maintain the target interest rate, the Fed will have to print money. Regarding empirical data, consider that most of the ideas in economics are expressible as statements about the sign of the first partial derivative of two variables. Are such claims really subject to empirical testing? Let me give a noneconomic example. The surface area of an ordinary sixsided cardboard box is defined by A = 2(xy + yz + xz). Suppose I claim that the first partial derivative of A with respect to x is greater than 0. In economicsspeak, "Ceteris paribus, wider boxes have more surface area." How many cardboard boxes would be a sufficient sample size to falsify my claim? An infinite number would be too small, right? Now suppose that I claimed that ceteris paribus, an increase in the demand for any good, including credit, would result in an increase in the price of that good. How is that different? Posted September 24, 2005 12:46 AM
Bruce Bartlett writes:
I agree with the statement that Austrians tend to take the view that if you are not with them 100%, then you are the enemy. Personally, I gave up on them 25 years ago when I realized that they were incapable of dealing meaningfully with relevant policy issues. For example, how can you rationally discuss tax policy with people who believe that all taxation is per se theft? They simply don't accept the ideas of better and worse. If you are not for abolishing taxation, then you might as well be for 100% tax rates, the way the Austrians see it. I continue to believe that true Austriansi.e., Mises and Hayekhave many useful things to teach. But they would be bannished from today's Austrian School by many of its current devotees because they didn't favor anarchism. For the most part, totay's Austrians have little in common with those who created that school of thought. They are radical anarchists who would be better considered Rothbardians. There is nothing wrong with being a follower of Murray Rothbard or favoring the abolition of all government. But it makes it very difficult to have a diaglogue except among other true believers, and it confuses people when the true Austrian School is presented as something it clearly was not. Posted September 24, 2005 1:21 PM
gary lammert writes:
The Austrian Economists and in particular, Lugwig Von Mises, understood the consequences of excessively low interest rates and imprudent lending practices. These parameters have led the global economy to an unnessary extremely imbalanced position as suggested by equity valuation fractal analysis. The macroeconomic world appears to operate and, operate Because equity valuation fractals exactly represent the complex Each day new valuation information is added and the consistent fractal patterns and overall fractal puzzle gains greater clarity. Since 12 March 2003, the beginning of the current major three phase fractal growth period, the idealized fractal evolution has been simply exquisite. In general, major growth fractal units of significant length, e.g., weeks and months, are determined by low valuation points and the connecting underlying slope line which contain all interval points. The below data for TMWX can be easily confirmed by using 'Big Charts'. First growth fractal (x): 103 days (12 Mar 2003 6 August 2003) Second growth fractal (2.5x) 258 days (6 Agust 2003  13 August 2004)(note nonlinear drop on August 6, 2004 denoting the hallmark of a second fractal) (The exact idealized time frame is 103 x 2.5 = 257.5 days. Notice that the closing low is actually lower on 12 August 2004 with an intraday lower low on 13 August for exactly 257.5 daysexactly matching the idealized low). The idealized expected third growth phase and the idealized decay cycle would be: Third growth cycle idealized (2x) 206 days Notice that the sum of the first and second growth cycle equals the sum of the third growth cycle and decay cycle: 103 + 257.5 = 206 + 154.5 = 359.5 (The first and last day are double counted requiring a subtraction of 1) Now look what has happened in the real fractal evolution of the third growth cycle starting 12 August or 13 August 2004. It has been composed of three subfractals: First subfractal: (y) 5152 days 12/13 August  25 October 2005 Second subfractal (2.5y) 129130 days 25 October 2005  29 April 2005 (note nonlinear drop on April 15,2005 denoting hallmark nonlinear devaluation of the second fractal) Third subfractal (2y) 103104 days was ideally completed on Friday 23 September 2005. Remembering that the sum of the first two growth fractals equal the the sum of the third growth fractal and the decay fractal, the decay fractal should be equal to: Expected Decay Fractal: 51.5 +129.5 minus 103.5 (1 for double counting) = 77.5 days. Notice the sum 51.5 + 129.5 + 103.5 + 77.5 (3 days for double counting) = 359 days. This most remarkably agrees with the above idealized expected third growth cycle and idealized decay cycle within half a day. This total cycle equivalent day fractal rearrangement potentially The base containing the 3 August 2005 Wilshire high starts on 18 July 2005 and is 16 days in length  vice 14 days. The evolution is 4/8/6 days. Rather than being the actual primary decay base, it appears to be a bridging intermediate base whose second fractal sequence contains the actual base for the primary devolution.The expected low of a second fractal with base of 16 days is on day 40(2.5x). This last Friday, September 23, was day 34 of this 40 day sequence. Using a 16 day base, there should be 6 more days to a low. Likewise including the TMWX secondary peak(in reference to March 2000), 3 August 2005, is a potental interlocking confirmatory base sequence starting on 29 July 2005. This base sequence is following the classical x/2.5x/2x/1.5x and is 7/17/14/and 5(as of 23 September 2005) of 1011 days. Noticed that the expected low occurs on the same 40th day(or one day earlier) of the 16/40 x/2.5x sequence as delineated The potential real first decay fractal base is contained within these two above interlocking fractal patterns and appears to be 3/7/2 (as of September 23) of 78. The primary decay base would consist of 1516 days starting on the lower high of 12 September 2005. The idealized decay pattern would be either( for a total of 78 days from the 103104 day third fractal third subfractal lower high): 15/37.5/37.5 x/2.5x/2.5x or By this fractal reckoning the first decay base low will be reached in 56 more days and the entire three phase fractal decay cycle will be reached in 77 more trading days. Considering the enormity of imbalances, entitlements, and outstanding debt, this devolution could potentially represent the 147 year nonlinear fall into the abyss. The collapsing financial picture will tax the American banking system with its inadequate fractional cash reserves in its ability to redeem deposits of concerned savers. This is not investment advice. It is a rather specific prospectively However, the odds that the preceding identified daily Wilshire's ReplyForward Posted September 24, 2005 5:40 PM
Bill Stepp writes:
Bruce Bartlett asks: ...how can you rationally discuss tax policy with people who believe that all taxation is per se theft? They simply don't accept the ideas of better and worse. If you are not for abolishing taxation, then you might as well be for 100% tax rates, the way the Austrians see it. Rothbard discussed all forms of taxation in his book _Power and Market_ without using the A word, although he did begin the book with a discussion of private defense services. Most Austrians, especially Rothbardians, are irked by the idea, often upheld by conservative, free market proponents, that tax cuts must be "revenue neutral" and "pay for themselves." Posted September 25, 2005 12:47 PM
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