I was recently informed on another forum that Austrians are not taken seriously in academia and they have not given any reasonable explanation for the recent financial crisis. Is that because mathematical modeling is not core? I was also told that starting from first principles or behavioral analysis to understand or describe a market is useless since there are a great number of consumers, markets, governments, etc. You use statistical tools to make inferences on the largest portions of data. What is the Austrian reason for the financial crisis? The thread was about getting a master's in economics and what the job entails in industry. From the impression I was given, Austrianism and economic philosophizing in general is purely academic and not taken seriously. I'm curious what you guys think here.
How does printing money delay hyperinflation? I always thought it increases inflation?
It does. What I meant was that the money creation keeps the currency from crashing, it's a stimulus that keeps the machine running and the government able to service it's debt. The crash that Schiff keeps predicting would have happened if it wasn't for this unprecedented money creation.
EmperorNero:It does. What I meant was that the money creation keeps the currency from crashing...
My turn...
How does printing money keep a currency from crashing? I always thought it decreases a currency's value.
Yes, it decreases the currencies value in the long term. In the short term it creates a bubble, that keeps the boom going.
How does higher prices in a certain sector (aka "boom"/"bubble") keep a currency from crashing? Aren't higher prices the result when a currency crashes?
Three eggs for 100 billion dollars?
shackleford: Three eggs for 100 billion dollars?
yup, thats the world of hyerinflation
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I doubt you'll find anyone in Zimbabwe using Zimbabwe dollars; most people either use hard currencies (e.g. the USD) or just barter.
Also, unemployment is somewhere in the area of 90%. Most people who are employed are civil servants.
Of course no one uses those dollars now (and everyone is better off for it), but that's what prices were. Now the price is virtually infinite because the currency is literally worthless.
I thought the fiat money was based on the guarantee of the government accepting it for the purposes of paying taxes.
I'm a math major, physics minor senior.
*bump*
Dude! So was I! That exact same combination. In grad school now.
I just wanted to pop in to say welcome.
(Also, you'll probably have to have a lot of patience to get through the dogmatic to the theory.)
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Are you in grad school for economics?
shackleford:I thought the fiat money was based on the guarantee of the government accepting it for the purposes of paying taxes.
No if you lookup "fiat" you'll see it's just an authoritative decree. So a "fiat currency" is just that...a currency that is a currency because the government says it's a currency. It has no real baring on taxes (although that is generally how it works..you don't declare something is a currency and then not accept it for payment...but it's the declaration that allows for the tax payments, not the other way around.)
You finish the other 2 vids?
I think some schools and some professors are more open towards Austrian perspectives - however you will find that this is less the case in high-ranked universities where faculty and students have "put all their eggs into one basket" so to speak and specialized very heavily in certain mainstream models like RBC (Real business cycle) and Neo-Keynesian models. You will find that a someone who is mainstream but pro-free market generally follows RBC theory.
Those models are, of course, extremely math-intensive and complicated. I'm currently doing a Master's in Economics at a business school in Canada and will probably barely look at them, mainly because I am more focused on microeconomics than macro/financial stuff. So I'm not much of an authority, but it seems like this is the situation: the Austrian view is actually somewhat more intuitive and simpler to understand than mainstream models, so it gains some traction in media/lower-ranked academia, but is disregarded in more complex/advanced academic work. I couldn't tell you whether this is because mainstream academics don't want to throw away all their hard work or because the mainstream models are actually more accurate or have better theoretical foundations.
Um....Kay.