Wall Street Journal Endorses Austrian Economics?

November 9, 2009 at 1:00 am Leave a comment

Could it be? Am I dreaming? These were the thoughts running through my head on Friday when I read that the Wall Street Journal had published an op-ed lamenting the fact that the ideas of Austrian economist Ludwig von Mises are not given the credit they deserve.

Mark Spitznagel, founder and chief investment officer of the hedge fund Universa Investments LP explains the Misesian story of how government-induced credit expansion encourages continued investment in wasteful and unsustainable lines of production (as opposed to allowing the free market to allocate resources into the lines most highly-valued by consumers) and eventually leads to a situation where the system “collapses under its own weight”. Furthermore, Spitznagel credits Ludwig von Mises with predicting the Great Depression and states,

“How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale?”

With every passing day, it is becoming more and more apparent that the Keynesian policy recommendations so popular today, despite being discredited by the stagflation of the 1970s, are doomed to failure. Supporters of freedom cannot afford to let this opportunity pass us by. When even a statist organ like the Wall Street Journal is publishing op-eds admonishing policy makers, “Don’t encourage consumption, but rather encourage saving and the repayment of debt”, it shows that the loss of freedom is not inevitable so long as those who understand sound economic reasoning remain vigilant.

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