Wow!, I’m the first commenter?

OK, I’m enjoying the session immensely.

I’d like to add to Prof. Herbener’s response to the question of “Why is the Austrian School marginalized?”.

Of the 3 main schools, Keynesian, Chicago (monetarist), and Austrian, Austrianism is LEAST FRIENDLY to Government expansion. Makes it VERY unpopular among the Powers That Be.

as an aside…

Book?

“why we haven’t seen it already?”

- hyperinflation is the death of currency and it requires political affirmative action, there wasn’t enough of it yet (apparently) and it’s being balanced by the stuff mentioned below, people do not buy CPI, people buy stuff and the price of stuff goes up, price inflation is here
– petrodolar: most countries are not allowed to buy and sell oil for any other currency, few that tried got bombed and invaded, Iran’s next, but it’s changing – I heard of China and Iran
- reserve currency: central banks hold and accumulate dolars which pushes it’s price up, the status of RC is declining and will vanish at some point
- people in 50 countries use up to 7 trillions of green papers because their national currencies are junck’ier, that’s a market that dilutes inflation even greater
http://www.caseyresearch.com/editorial/3731
- also Greece happened which directed the attention of investors to problems of 4th Reich, sorry, EU and from the problems of US, the whole world of finance is falling appart – your model has been exported everywhere with most of its implications, it can’t go forever, it’s mathematically impossible to accumulate debt forever because finally you’ll run out of borrowers, sort of like run out of other people’s money with regards to socialism – it’s intertwined
- the money was not yet released mostly, because Fed pays interest on reserves parked at the FED, but it’s not FED’s money so when the interest rate jumps, and it will when the inflation spikes visibly to all the drones (because it’s not the FED that sets rates, FED only engages in open market operations in aim of setting IR, there is no lever at the FED with huge IR sign on it)
- money is busy fueling China’s (1,3 billion people) real estate bubble? just a guess, ghost cities, no light in sky scrapers at night
- What’s the moral? The bigger they get…

“I thought all those things were supposed to cause inflation.”
- No, they are inflation. Significant price inflation, the one that all people will see and get angry at, except Krugman, is down the pipe.

” Is he saying that there wasn’t enough of it to cause inflation? Isn’t that the
same as Krugman saying there wasn’t enough of it to fix the economy?”
-You’ve read it, haven’t you? What he is saying:

“Itwould seem that the inflationary and Keynesian policies followed by the
US, Europe, China, and Japan have resulted in an economic and financial
environmentwhere bankers are afraid to lend, entrepreneurs are afraid to invest,
and where everyone is afraid of the currencies with which they are
forced to endure.”
- In other words regime uncertainty. People are scared, not – people are not happy enough (animal spirits) with the level of money printing.

“And don’t we love to laugh when we hear that?” “I have to admit this issue is making me question austrian economics as a whole.”
-No, you’re keynesian, or monetarist which makes little difference, but nice try.

Thanks for responding. There’s a lot involved and I appreciate you taking the time.

I can understand why inflation might take awhile. What I don’t understand is why it might not ever happen per what dr woods said in this talk.

Yes I understand that there’s a difference between inflation and price inflation but I think it was clear what I meant.

I’m not sure if you’re calling me a Keynesian/monetarist but having legitimate questions that I haven’t found satisfactory answers to doesn’t make me some kind of troll if that’s what you’re implying. Thanks anyway.

Aww, sorry for that. Austrians are a cult you know They believe (religiously) that “empirical evidence” do not trump economic theory. They want you to show them where are they wrong in their logical resoning – just nuts. So I assumed you’re a progressive new keynesian, or NGDP worshiper.

“Yes I understand that there’s a difference between inflation and price inflation but I think it was clear what I meant.”
One is the cause, the other (defined: general price level increase) is a likely effect. Why would price inflation not appear while there is money creating? Because there might be more stuff around – there was price deflation in IT industry despide rampant inflation. the computer supply inflated more than the money supply. But computers were that way because entrepreneurs made them cheapper to capture market and profit, because the more you take of the first one the more you get the latter. Something like this happened in Japan for a decade or two also. Productivity roughly “evened” money printing, prices stayed flat when they should have dropped substancially and increasing Japanese standard of living even more.
“I can understand why inflation might take awhile. What I don’t
understand is why it might not ever happen per what dr woods said in this talk.”

Aound 59 right. Well they didn’t say that actually. They said rollback on LTL which would mean actually free market in money, would cause abandonment of dollar – seems like a drop to zero in value or close. Woods, I don’t know, he thought it woould mean the dramatic event. They are both right, Herbener is talking about Ron Paul solution (I think) fo competeng currencies – one of the ways austrians would approach practical programs to heal the situation, an idealistic situation. Still hyperinflation if you ask me. Woods on the other hand hesitates and considers realistic approach, meaning that government won’t let the above happen. And he thinks it will be instead “dramatic event”. With or without hyperinflation is not certain, but what could be dramatic to Americans now, hmmm?

My conclusion is that there is some sort of cognitive barrier for many about hyperinflation. At least I’ve failed to be convinced yet by any of the arguments that it won’t or probably won’t happen. It seems that those with interests greatly affected by hyperinflation have a harder time dealing with the possibility than those for whom it could actually be profitable.

For example, firms that pick stocks and other investments for subscribers for a set annual fee have an easier time with it than brokers and managers who can only receive their 2% commission if people keep buying financial assets. If everyone cashed out, bought mostly gold, food, land, and other hard assets, there would be a collapse in their porfolio management businesses. I have to believe that affects their analysis.
Conversely, those who provide PM sales, analysis, storage, etc seem more convinced it’s likely.
Both are talking their book to a degree. But the simple exponential math of endless deficits and massive politically sensitive obligations tends to make me believe it’s very possible.
The way I see it, prepare for it, and if you’re wrong, you still win, as you still have a job, savings, and a normal societal structure. But if you fail to prepare for it and it happens, you lose your savings, your job, and maybe even your life.

Almost every day on the Peter Schiff Show..