Interesting comment, Carsten. Regarding GDP, Robert Higgs has done some important work refuting the idea that WW2 lead to economic recovery, he argues that measures such as GDP become almost meaningless in a planned economy with rationing and price controls..

For a book length treatment of this stuff I would recommend Meltdown by Thomas Woods, it will give you a wider and deeper treatment of what this article covers (and with funnier jokes). Haven’t read it yet but by all accounts it’s excellent.

When will people realize that everything that is being done right now is meant to preserve the power and wealth and privilege of a few?

For other readers looking to gain more insight, I especially recommend reading Antal Fekete’s articles. He expands on some of this by pointing to the dangers not of a LOW interest rate regime so much leading to mal-investment (true enough), but to the corrosive/erosive effect on capital due to a FALLING interest rate regime. The latter is what we have had for 30+(40+) years, even despite the brief Volcker blip-up. Easily seen in long term bond price-charts. Fekete’s approach is more post-Mengerian than Misesian.

In addition, one thing that Austrian theory followers implicitly acknowlege, but seldom state outright, is that the whole mainstream notion of recession, depression, growth, etc, all based on dubious metrics such as GDP, etc is questionable.

For example, mainstream approach defines the post 1929 era as a depression, and the post 1980 era as growth, based upon GDP, production metrics. Yet, using quality of life metrics, such as consumption figures of superior goods, or charitable giving, it is the other way around. In the thirties, American charitable giving reached the highest it has ever been, meat consumption per capita increased, as did butter usage, and inferiors such as margarine declined. These are not signs of growing poverty, but increasing wealth, hence no depression (why? because of a deliberate and good Rep. policy to help savers, by constricting the WWI inflated money-supply back to prewar levels). Prices declined, purposefully, and usefully, hence FDR’s attempts to prop them up, by plowind and butchering.

While the bansters were much worse off in the thirties, and malinvestment produced rising unemployment (failure of wages to adjust to increasing value of the currency), the average American was not. Since the 80’s this is in reverse, the banksters are much better off, but wages have failed to adjust up to declining currency (wages always lag), causing most to be worse off (”the first generation doing worse than their parents…”).

The mechanisms the Austrians define at root in both cases are correct, but the terms used to describe these periods, and, more important, our perceptions of these periods, is the reverse of what it should be.

Roosevelt’s “forgotten men” were the disadvantaged and the poor who needed our help rather than those who worked and produced, thus shouldering the burden of relieving their fellow man from “nature’s fierce discipline”.

The more Austrian “theory” (I believe long since proven fact) I read the more amazed I am at the insight and near prophetic abilities of the Austrian economists.

Excellent article! I will be passing it along to all my friends!

I posted both to Kitco Forum which has thousands of members.

Does anyone else think that it is useless to tell the politicians to do nothing? Its impossible cos they are hardwired to do so…

I just wish there was a influential politician who masquerades as a Keynesian, but in actual fact is an Austrian by nature.

This way, he/she could slowly turn the politicians’ minds towards a smaller government.

Maybe it already is in progress? Doesn’t look like the plan is working though… sigh.