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Austrian theories appeal to me/seem correct beyond just a kernel, but I’d consider myself an amateur/haven’t read enough to be confident about my opinion. Spec

Austrian theories appeal to me/seem correct beyond just a kernel, but I’d consider myself an amateur/haven’t read enough to be confident about my opinion. Specifically, the emphasis on relative value seems correct, the emphasis on the importance of keeping pricing signals pure/unaffected by artificial monetary supply changes to effectively allocate resources seems correct, the argument that market incentives exist for keeping interest levels reasonable without centralization seem correct, and the argument that central banks are incentivized to mismanage monetary policy over time for political reasons seems correct. The counter arguments against Austrian ideas that seem most compelling to me are that having non centralized currencies leads to financial inefficiencies that outweigh any benefits of having market determined interest rates because of exchange friction, and that a lack of planned inflation and adoption of more hard currency would mean the velocity of money would be low and cause the economy to lock up. I’d be very interested in a book advocating the more traditional view in favor of central banking aimed specifically at Austrians and people like myself who find the Austrian arguments compelling. If anyone here has more economic knowledge and thinks I mischaracterized the arguments I found compelling, garbled them, or misattributed them, please correct me.

quadrangle 5y ago
Austrian economics is all anti-empirical say-so internally-consistent models that aren't tested against reality. Traditional economics is stuff that claims to be more empirical but fails to do so and focuses almost entirely on official stats and on its own versions of models that aren't tested against reality. The whole field of economics is overall messed up. It's insular, arrogant, and extremely resistant to outside criticism. And it's dangerous as economics claims are used to justify so much. Random amazing example: In https://www.npr.org/transcripts/980841456 https://www.npr.org/transcripts/980841456 and from "My question is, what is the M1 money supply, and the M2 money supply, for that matter?" last third of it, insanely clear and amazing. In short: Q: more money! does that mean inflation? check with this econ textbook author Author: oh, that's embarrassing, that chapter shouldn't be there Q: so what causes inflation? Author: people buying stuff more, demand going up (unless it's insane money supply like Venezuela or Zimbabwe level insane) Q: so why is the chapter in your textbook? Author: um, publisher said that if we don't say that more money means inflation then econ professors won't use our textbook. They learned that idea in their original studies, so they will only use a textbook that lets them teach it. But it's wrong, and we shouldn't have put it in the book.
- kangaroozach 5y ago
  More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly printed dollars, (government) who cares! You get to spend it!
  - quadrangle 5y ago
    "Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.
Rediscover 5y ago
I found Simon Kuznets multi-volume piece on economics (including cycles) really interesting ~35 years ago. Many U.S. university libraries have a copy if/when You want to peruse it - it greatly expanded my thinking about those systems regardless if I am a "True Believer" or not. Those volumes can be pretty challenging at times, but extremely in-depth. Fascinating intro to cyclic theories of economics for a person who tires of business/econ literature not having an engineering perspective (if it's correct or not, at least it's defended - make up your own perspective on the material presented). FWIW, a minor comment by Paul Hawken, writing in CoEvolution Quarterly (Best Periodical Ever in my opinion), is what alerted me to Kuznets. Edit: Adding that Kuznets is a major influence on Austrian economics, and has influenced U.S. economics at high levels. Edit01: minor English corrections.
- didericis 5y ago
  Thanks for the reading recommendations, looks like a solid set of material. Do you know where I could find copies of the periodicals? Looks like there are some scattered hard copies on ebay, but the web archive mentioned here is down: https://rs.resalliance.org/2009/02/03/whole-earth-web-archive/ https://rs.resalliance.org/2009/02/03/whole-earth-web-archiv...
  - Rediscover 5y ago
    Nearly every library has CoEvolution Quarterly (CEQ)/Whole Earth Review (WER). It could be filed under either or both names. Same periodical, same people. Founded by Stewart Brand.
    - Rediscover 5y ago
      * ...every sizable, North American, library... (That I have found)
eru 5y ago
You might like the work of George Selgin. He's an Austrian economist, but not of the 'Internet Austrian' persuasion. He's done lots of work on the history of money and banking.
- didericis 5y ago
  Thanks, will check him out as well.

quadrangle 5y ago

Austrian economics is all anti-empirical say-so internally-consistent models that aren't tested against reality. Traditional economics is stuff that claims to be more empirical but fails to do so and focuses almost entirely on official stats and on its own versions of models that aren't tested against reality. The whole field of economics is overall messed up. It's insular, arrogant, and extremely resistant to outside criticism. And it's dangerous as economics claims are used to justify so much. Random amazing example: In https://www.npr.org/transcripts/980841456 https://www.npr.org/transcripts/980841456 and from "My question is, what is the M1 money supply, and the M2 money supply, for that matter?" last third of it, insanely clear and amazing. In short: Q: more money! does that mean inflation? check with this econ textbook author Author: oh, that's embarrassing, that chapter shouldn't be there Q: so what causes inflation? Author: people buying stuff more, demand going up (unless it's insane money supply like Venezuela or Zimbabwe level insane) Q: so why is the chapter in your textbook? Author: um, publisher said that if we don't say that more money means inflation then econ professors won't use our textbook. They learned that idea in their original studies, so they will only use a textbook that lets them teach it. But it's wrong, and we shouldn't have put it in the book.

kangaroozach 5y ago
More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly printed dollars, (government) who cares! You get to spend it!
- quadrangle 5y ago
  "Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.

Rediscover 5y ago

I found Simon Kuznets multi-volume piece on economics (including cycles) really interesting ~35 years ago. Many U.S. university libraries have a copy if/when You want to peruse it - it greatly expanded my thinking about those systems regardless if I am a "True Believer" or not. Those volumes can be pretty challenging at times, but extremely in-depth. Fascinating intro to cyclic theories of economics for a person who tires of business/econ literature not having an engineering perspective (if it's correct or not, at least it's defended - make up your own perspective on the material presented). FWIW, a minor comment by Paul Hawken, writing in CoEvolution Quarterly (Best Periodical Ever in my opinion), is what alerted me to Kuznets. Edit: Adding that Kuznets is a major influence on Austrian economics, and has influenced U.S. economics at high levels. Edit01: minor English corrections.

didericis 5y ago
Thanks for the reading recommendations, looks like a solid set of material. Do you know where I could find copies of the periodicals? Looks like there are some scattered hard copies on ebay, but the web archive mentioned here is down: https://rs.resalliance.org/2009/02/03/whole-earth-web-archive/ https://rs.resalliance.org/2009/02/03/whole-earth-web-archiv...
- Rediscover 5y ago
  Nearly every library has CoEvolution Quarterly (CEQ)/Whole Earth Review (WER). It could be filed under either or both names. Same periodical, same people. Founded by Stewart Brand.
  - Rediscover 5y ago
    * ...every sizable, North American, library... (That I have found)

eru 5y ago

You might like the work of George Selgin. He's an Austrian economist, but not of the 'Internet Austrian' persuasion. He's done lots of work on the history of money and banking.

didericis 5y ago
Thanks, will check him out as well.