Minsky and Mises
Saturday, October 24, 2009This is not a very sophisticated article (“Muddying the Regulatory Debate” from the Financial Times), but it does give attention to Mises and the Austrians. He presents some weak interpretations of Mises, and this paragraph seems to say that Misesians would propose intervention to downsize the banking system? Maybe I am reading it wrong, but the writing/editing of the piece seems somewhat anemic.
For followers of von Mises, the expansive monetary and fiscal policy that has followed the crisis is wrong. They would advocate a drastic paring back in regulation and the removal of discretion from central banks. Presumably, as they hold that the market would not allow institutions to become too big to fail in the first place, they would support some kind of intervention to make the biggest banks smaller.
See Frank Shostak’s, “Does the Current Financial Crisis Vindicate the Economics of Hyman Minsky?” and Robert Blumen’s “Having a Minsky Moment?“
Jeannie Queenie says:
October 24th, 2009 at 11:39 am
In Blumen’s MINSKY HAVING A MOMENT?, a commenter/Anthony offers up the intelligent insight….”Does Minsky even question the premise that the central bank is a sine qua non of capitalism?” I look to past presidents like Ronnie Reagan and his gem, “The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”. Which means that now a whole lot of things will be subsidized. Then Dan Quayle a while back offered this… “Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement”. That quote sure does cover the idiots at central banking scrambling to cover their derrieres over derivatives. And then on the older and wiser front, 250 years ago, our third President, Thomas Jefferson was magnificently on the mark when he said the following…”I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, UNDER THE NAME OF FUNDING, is but SWINDLING FUTURITY on a large scale.”
One would think that Bin Laden must have known this when he declared after 9/11 in one of his screwy little videos where he peered into the camera into the eyes of America, and proclaimed that our economy would bring us down…who woulda thunk….a pair of box cutters and our own gov’t coupled with our bankers/monetary policy or the lack thereof, would aid in finishing us off. Guess you have to give him some credit for knowing how to cut down the supposed enemy without lifting a finger. How did he know?
Damon says:
October 24th, 2009 at 5:44 pm
At least Authers admits to presuming (wrongly).
cousin lucky says:
October 26th, 2009 at 6:33 pm
Speaking of Mises, Lew Rockwell posted a fine piece today at:
http://www.lewrockwell.com/rockwell/econ-and-moral-courage129.html