Hangover Theory: How Paul Krugman Has Misconceived Austrian Theory

Ludwig von Mises Institute ^ | 7/31/09 | David Gordon

[Rodebrecht]

Paul Krugman is an eminent economist, but he here reveals a woefully inadequate understanding of Austrian business-cycle theory. The rudiments of the theory are easy; one might have thought that even a Keynesian could grasp them.

According to Mises and Hayek, an expansion in bank credit pushes the money rate of interest below the "natural" rate. People prefer goods in the present to the same goods in the future, a matter obvious to anyone except for a few philosophers. The rate at which people favor the present, in the Austrian view, chiefly determines the rate of interest.

[fso301]

Paul Krugman is an eminent economist

Should read Paul Krugman is an eminent Keynesian economist not too far removed from a Marxist economist.

[PGR88]

Paul Krugman is an eminent economist

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Krugman is a politician pretending to be a scientist

[Jabba the Nutt]

The “mainstream” economists are totally clueless about Austrian economics. They’ve never read a thing about it. They are ignorant and clueless as to the cause of the business cycle. No mainstream economists can tell us what the cause of recessions are.

[ntmxx]

Keynesian economics is based upon steal first, pay later. Can you say Bailout, TARP and Stimulus…just another moment brought to you by Marx and other masters of smart in socio-economics.