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Ahistorical. As in not backed up by history? You'll have to cite with examples. Here's some of mine: Amsterdam opens the precursor to central bank in 1609[0].
by padobson 9y ago
Ahistorical. As in not backed up by history?
You'll have to cite with examples. Here's some of mine:
Amsterdam opens the precursor to central bank in 1609[0]. Less than thirty years later, one of the earliest speculative financial crises on record demolishes the Dutch economy.[1]
In the early 20th century, fractional reserve lending practices paired with a rapidly growing economy leads to the first banking crises, most notably in 1907[2]. The damage is largely limited to financial types, but the banking industry starts clamoring for government help to feed their recklessness.
The government obliges them with founding of the Federal Reserve in 1913[3], which allows fractional reserve lending to go off the rails. A World War and a boom cycle later, and we have the worst financial catastrophe in history in 1929[4].
Going off the gold standard in the 1970s preceded the financial crises of the early 80s[5] and the Black Monday in 1987[6]
Finally, another lax round of monetary policy under Greenspan led to a rash of bad investments in dotcoms, and then Bernanke helped precipitate the 2008 financial crises.
Now, you can go ahead and say that I'm making a post hoc ergo propter hoc argument, and that's fine, BUT you absolutely cannot say Austrian economics is ahistorical. It completely relies on history as its foundation.
[0]https://en.wikipedia.org/wiki/Amsterdam_Wisselbank https://en.wikipedia.org/wiki/Amsterdam_Wisselbank
[1]https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
[2]https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907
[3]https://en.wikipedia.org/wiki/Federal_Reserve_Act https://en.wikipedia.org/wiki/Federal_Reserve_Act
[4]https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
[5]https://en.wikipedia.org/wiki/Black_Monday_(1987) https://en.wikipedia.org/wiki/Black_Monday_(1987)
- ska 9y agoI am of course not suggesting Austrian school has paid no attention to history. Insufficient, perhaps :) I'm objecting to the rather stronger (than an austrian would make) statement that :"systemic financial crises cannot happen without cheap,printed money". Emphasis mine. You even have to squint very hard at your first example to make it fit - it's increasingly hard to try and argue from anything pre 18th century. You can probably (and many Austrian's would) try and make the argument for this as a root cause of most/all modern crisis, but of course alternate analysis exist that are similarly grounded. It's a complex subject.
- padobson 9y agoI think all of your points are valid. It IS a complex subject, and we should be open to many view points. There are certainly a number of lines of attack on my ideas that are valid and reasonable. I bristled at the idea that my statement is ahistorical. It may have other problems, but I've yet to see any historical counter examples - a period of mass-deleveraging leading to economic retractions in the absence of artificially low interest rates. If you can cite an example like that, I'll rethink my statement.
- ska 9y agoOk, I don't have time to do this properly but as a first pass: 1) I think you are now narrowing quite a bit ".. mass-devleveraging ... interest rates" 2) Consider e.g. sovereign defaults of England and Spain in 14th, Roman bank collapses & liquidity issues - multiple times during both Roman and Byantize (will posit that many early issues are difficult to separate from wars, but there were fairly clear panic effects in iirc 3rd and 4th). Italian banks in 14th c. etc.