Karl Graber says the crisis in the spectrum was due to the intellectual ideas of interventionism by Keynes (Keynesian consensus). Briefly, the thesis that the expansionary monetary policy to the U.S. and Europe have led to the crisis. One should not be surprised if the monetary expansion has led to misallocation. It relies on the economic theory of Karl Graber of the Austrian School. Not lax regulation of financial markets but expansionary monetary policy was the cause of the crisis.
I'm not convinced.
was true that monetary policy in the United States shortly before the crisis easily - ex post, it is not entirely clear, as the timely to be determined. There are more than a Taylor rule (see ) that give more definite answers. For Europe, an excessively loose monetary policy before the crisis are more likely to be excluded. Moreover, the crises in Iceland, Ireland and Spain have no fiscal crisis but primarily crises of the banking system.
The Austrian business cycle theory in its popular variant argues that easy money follow to misallocation and leads to crises. This is where the assessment of other entrepreneurs in this school rätselhalft something, like Bryan Kaplan says:
Why does Rothbard think businessmen are Sun incompetent at forecasting government policy? He credits them with entrepreneurial foresight about all market-generated conditions, but curiously finds them unable to forecast government policy, or even to avoid falling prey to simple accounting illusions generated by inflation and deflation ... Particularly in interventionist economies, it would seem that natural selection would weed out business people with such a gigantic blind spot.The irrationality of the entrepreneur is a sign that money is not neutral. John Quiggin argues
There's an obvious implication about the (sub) optimality of market outcomes here, though more obvious to a generation of economists for whom arguments about rational expectations are second nature than it was 100 years ago. If investors correctly anticipate that a decline in interest rates will be temporary, they will not evaluate long-term investments on the basis of current rates. So, the Austrian story requires either a failure of rational expectations, or a capital market failure that means that individuals rationally choose to make 'bad' investments on the assumption that someone else will bear the cost. And if either of these conditions apply, there's no reason to think that market outcomes will be optimal in general. Karl Graberconfused a lot when he points to the expansion of money supply in the crisis. This expansion of balance sheets and monetary base was substantially to prevent a bank aid package to a crash of the banking system. At the latest after Lehman Brothers, the interbank trading had collapsed. In order to prevent bank runs has also eased quantitatively. To date, the inter-bank market has not really recovered, even as the facilities and excess reserves for the banks attractive. The only the penalty were introduced to stimulate lending, the Swedish National Bank. It is thus managed a comprehensive banking crisis averted. to say now that this will lead to inflation and a new crisis is strange. Because of the drowning has swallowed a little brackish water, the rescuer is not to blame for the following stomach upset.
But still inclined seems to me that Graber's argument line when it comes to the condemnation of the "Keynesian consensus" goes. First Fed with its interest rate policy is to blame for the crisis and inflation, and then suddenly it's suddenly only to fiscal policy. Here, the description of the problem of the "Keynesian consensus" is correct in principle. The Keynesian consensus has costs. No question. A too-activist fiscal policy in relatively calm period is associated with a fiscal crisis of the State.
But not in recent years. The following graphic (can not find more recent) shows the Konjukturzyklen in the "Keynesian" phase and in the vorkeynesianischen phase for the United States. It is striking that in boom and bust vorkeynesianischen the regular phase and the beginning of the series is much grayer than the end of the series. This may have structural causes, but apparently was the phase of the "traditional consensus" associated with higher economic costs.
If Graber writes:
So it is no exaggeration, the "Keynesian consensus" for a chimera and the actual cause of the current financial and economic crisis to keep because it founding economic policy at the wrong end attaches, aufzäumt so the horse from the tail ago. The opposite would be true, what about the Wiener (or Austrian) school of economics 80 years ago knew with certainty. In the production of goods and services, ie on the supply side, are set be included where the ups and downs of economic cycles, this is unavoidable, kept small and the emergence and bursting of large bubbles (crisis that is) is to be prevented, because "if there were no find buyers and workers do not work, then that can only have one reason: The specified prices and wages are too high. Who wants to sell his goods or labor, must reduce his claim until he has found a buyer. This is the means by which the market directs the production to the tracks on which it can serve the needs of the consumer best. "(Ludwig von Mises, 1940)he lost me for good. In Austria and Germany, the crisis was caused primarily a crisis of the export-oriented industry, a decline in world trade. If Germany and Austria now stand as good, this has nothing to do with changes in the commodities produced, wage reductions or price reductions, but so that the global economy has started. Had to reduced working hours, to give government loan guarantees, change in bankruptcy law, etc.?
Graber's proposal to lower corporate taxes in half and tax credits for SME einzuführten I been able to gain little. If tax cuts, balanced, then for all. For if, as proposed, is the only fiscal policy - hold in the other direction. The same mechanism the graves of the "Keynesian consensus" is also criticized for such action. Thus, the argument is a primarily ideological. Moreover, it is because of the confusion of that little incentives as a stimulus. There is little evidence that lower taxes speed up structural change or the "animal spirits" fuel .* Most businesses are not entrepreneurial in a sense, Schumpeter (innovation), not even in a Kirzner'schen sense (arbitrage). Cheaper for the general public as guaranteed loans, which are also awarded only to companies carrying out the investment.
Next week there is an answer from Stephan Schulmeister. I do not think that this will please me better.
* So I've probably finally outed as the "Keynesian basic type".
