>A great piece about an economist that is rarely mentioned by the “well known” economists of today…..probably because they ignored his work, at their peril.
“Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.”
Mises predicted the Great Depression and his work would have led economists to predict today’s depression, yet I can tell you that in all my years of studying economics in school – Mises name never came up. Instead all we heard about was Keynes, a man who lost a bunch of money in the great stock market crash of 1929 and then was made famous because his work seemed to indicate that you could get out of a depression via government spending (which FDR used as his basis for increased government intervention). However, Mises had the right prescription:
“Mises’s solution follows logically from his warnings. You can’t fix what’s broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don’t encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I’m going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher.”
We have again chosen to side with Keynes, a decision that landed our nation in a perpetual depression under FDR and the reason the unemployment rate today is 17.5% (BLS U-6) and 22% if we use www.shadowstats.com measurements.
We are indeed on a dangerous path.
Scott Dauenhauer CFP, MSFP, AIF