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pepperonikkid

Are We All Austrians Now?

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pepperonikkid

Are We All Austrians Now?

 

https://www.libertynation.com/

By: Andrew Moran

October 16, 2020

 

Article:

 

“We’re all Keynesians now” had been the academic and political edict of the 1960s and 1970s following a series of interventionist economic measures by Presidents Lyndon Baines Johnson and Richard Nixon that altered the complexion of the United States. The U.S. government abandoned any semblance of respect for the conservative traditions, while embracing the diverse array of big-government schemes emanating from the minds of central-planning crusaders. Fifty years later, the famous statement had been revived after Republicans and Democrats threw everything but the kitchen sink at the Great Recession. As the latest fiscal and monetary endeavors become a parody at this point, the smartest men and women in the room are starting to question the statist response to the coronavirus-induced financial crisis. A shrug, a chuckle, and an eye roll – what else would they do but more of the same?

Austrian Economics: A Primer

Austrian Economics is a school of thought that can be traced back to the times of Saint Thomas Aquinas and his explanations of human action. For the next several centuries, prominent minds – Richard Cantillon, Carl Menger, Ludwig von Mises, Frederic Bastiat, and Murray Rothbard – turned classical economic thinking on its head by homing in on subjective value, marginal utility, time preference, and individualism. It stresses the utmost importance of free markets, and it warns against the dangers of the state. The great Henry Hazlitt dismissed the idea of only good economics and bad economics because economists who identify with the Austrian school “believe that its fundamental theses are true, and offer more promise than any other for further progress in economic science.”

Good Night, Vienna

Liberty Nation Washington Political Columnist Tim Donner recently said it best: “No matter how you cut it, through a harrowing and unforgettable wave of chaos, hardship, and strife we never saw coming, only one thing seems certain: after 2020, we will never be quite the same.” And that is true for every facet of society, including the world of economics.

This year has been astounding for the fact that the entire financial community essentially conceded that it relies on the Federal Reserve’s money-printing and cheap cash injections to survive. The great minds on Wall Street had peddled the nonsense that the fundamentals of the stock market were sound, but COVID-19 pricked the Everything Bubble, leaving these same people to plead for the Fed to do anything to stop the hemorrhaging and prevent the equities arena from imploding. Like a genie, the central bank granted the New York Stock Exchange’s wishes with unlimited quantitative easing and near-zero interest rates. But the Fed is more like Faust’s iconic Mephistopheles character, with the stock market selling its insolvent soul for the S&P 500 and the Nasdaq Composite Index to hit all-time highs amid a pandemic.

But at least reputable figures are finally having their come-to-Jesus moment. It is better late than never.

Speaking in an interview with CNBC, former Goldman Sachs CEO Lloyd Blankfein admitted that he sees “bubble elements” in the stock market due to historically low rates producing free money for the power players on The Street.

“The wash of money is clearly creating bubble elements. You look at SPACs, and how much money is available on the basis of someone’s reputation, as opposed to a business plan,” he told the business news network. People are lending to what historically have been viewed as weak credits for very little money.”

Boston Federal Reserve President Eric Rosengren recently lamented on years of low rates exacerbating the present economic downturn. Rosengren was candid about a coming tidal wave of defaults and bankruptcies, as well as ZIRP making an economic recovery harder to realize.

 

 

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Jon Wayne

I also believe that Fed policy has put our country on the precipice  of some sort of financial collapse.  The Dow and Nasdaq seem dangerously overpriced to me.  Absurdly low rates have made the American tradition of saving money and earning interest a thing of the past.  All that's left to do with retirement money is to put it in stocks, mutuals, or other at-risk investments.  I long for the days when a nice quiet  5% rate for a safe and insured savings account was the norm.

  • Agree (+1) 2

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Coach
4 hours ago, Jon Wayne said:

I also believe that Fed policy has put our country on the precipice  of some sort of financial collapse.  The Dow and Nasdaq seem dangerously overpriced to me.  Absurdly low rates have made the American tradition of saving money and earning interest a thing of the past.  All that's left to do with retirement money is to put it in stocks, mutuals, or other at-risk investments.  I long for the days when a nice quiet  5% rate for a safe and insured savings account was the norm.

Yes and because interest on savings was kept so low people were forced into riskier investments just to keep up. Now what took years to accumulate could be gone in a puff of wind. 

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Dean Adam Smithee
11 hours ago, Jon Wayne said:

I also believe that Fed policy has put our country on the precipice  of some sort of financial collapse.  The Dow and Nasdaq seem dangerously overpriced to me.  Absurdly low rates have made the American tradition of saving money and earning interest a thing of the past.  All that's left to do with retirement money is to put it in stocks, mutuals, or other at-risk investments.  I long for the days when a nice quiet  5% rate for a safe and insured savings account was the norm.

Yes, that, PLUS the housing bubble that I think we're in the midst of. Historically low mortgage rates are getting people to pay stupidly high prices for houses, at least around here.

No tree grows to the sky.

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oki
22 hours ago, Dean Adam Smithee said:

Yes, that, PLUS the housing bubble that I think we're in the midst of. Historically low mortgage rates are getting people to pay stupidly high prices for houses, at least around here.

No tree grows to the sky.

 

    Pretty much all over.  Anywhere there is something of a decent local economy.  BUT, C19 will likely flatten a number of over priced markets, but could cause a big rise in others.

How so?  Simple.  If your job involves using a PC and essentially connecting to a network, or even being on the phone most the time you can work from home.  Meaning, everyone from customer service reps, to IT Engineers no longer need to live close to work.  To some degree this has been the case for a few years know, but C19 has only acellerated it.

No need for huge offices anymore either.  That segment is and will continue to get utterly hammered.  Anymore all you will need a space to set up some type of home office and a good internet connection.  Won't matter where you live.  A lot of people no longer having to be close to an office will live many many miles away.  Work for a company that is in N.Y.C. but live in say rural Kentucky.  Lord help anyone who has there money in Commercial Real Estate.

 

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