Here is his latest attempt to confuse and befuddle as he leaves one discombobulated and none the wiser. Yglesias crawls along as he confounds fact and fiction and then reaches his crescendo of confusion when he states:

“Many of the original Austrians found their business cycle ideas discredited by the Great Depression, in which the bust was clearly not self-correcting and country after country stimulated real output by abandoning the gold standard and engaging in deficit spending. Then for a long time after World War II, policy elites more or less agreed on a combination of “automatic” fiscal stabilizers (the deficit naturally goes up during recessions as tax revenues fall and social service outlays rise) and interest rate cuts. And it worked, so nobody much cared about Austrian economics outside of crank circles.”

Of course, no prestigious circle cared much about Austrian economics except the one that matters most that gave F.A. Hayek a Noble prize in 1974 for his pioneering work in the theory of money and economic fluctuations and his penetrating analysis of the interdependence of economic, social and institutional phenomena.

If Matthew or anyone else wants to see the error of their ways it is a quick click away and a short read to the real story behind America’s Great Depression.

Krugman begins:

“Friedrich Hayek is not an important figure in the history of macroeconomics.”

Yet, he was only willing to do so under the cover of a David Warsh article where Warsh states: “With the publication of ‘The Use of Knowledge in Society’ in the American Economic Review in 1945, [Hayek] essentially won on the ‘calculation debate,’ conducted with Ludwig von Mises and Oscar Lange, concerning the possibility of central planning.”

Krugman neglects to mention that Warsh goes on to discuss the contributions of Dr. Robert Nozick, Rep. Ron Paul, and George Mason Economics professor Russ Roberts and filmmaker John Papola’s two widely-viewed videos, “Fear the Boom and Bust” and “The Fight of the Century.” Or, his citing approvingly of Bruce Caldwell of Duke University‘s summation that [Hayek's] “‘twin ideas of evolution and spontaneous order’ become prominent, especially the idea of cultural evolution, with its emphasis on rules, norms, and decentralization.”

Krugman may also want to reread Warsh’s final paragraph where he states:

“These are today lively concepts in laboratories and universities around the world.”

And, then we can read the words of the Nobel committee that awarded Professor Friedrich von Hayek the Nobel:

“Hayek’s contributions in the fields of economic theory are both deep-probing and original. His scholarly books and articles during the 1920s and 30s sparked off an extremely lively debate. It was in particular his theory of business cycles and his conception of the effects of monetary and credit policy which aroused attention. He attempted to penetrate more deeply into cyclical interrelations than was usual during that period by bringing considerations of capital and structural theory into the analysis. Perhaps in part because of this deepening of business-cycle analysis, Hayek was one of the few economists who were able to foresee the risk of a major economic crisis in the 1920s, his warnings in fact being uttered well before the great collapse occurred in the autumn of 1929…

“His conclusion is that it is only through a far-reaching decentralization in a market system with competition and free price formation that it is possible to achieve an efficient use of all this knowledge and information. Hayek shows how prices as such are the carriers of essential information on cost and demand conditions, how the price system is a mechanism for communication of knowledge and information, and how this system can mean an efficient use of highly decentralized resources of knowledge.

“Hayek’s ideas and analyses of the viability of economic systems, presented in a number of writings, have provided important and stimulating impulses to the great and growing area of research which is named comparative economic systems.”

Krugman can try to dismiss the “Hayek thing” all he wants as he attempts to whitewash history but it clearly is not going away.

Tom begins with elementary texts on economic reasoning and then supplements this with a video series by various excellent professors who discuss one chapter of Henry Hazlit’s Economics in One Lesson each.

He then builds on this basic knowledge with a variety of books, audio, and video that will keep you busy for the rest of the year.

And when you are done you can proceed here to the Mises Media page and here then to the Molinari Institute’s Heritage of Dissent: An Online Library of Radical Libertarian Classics to keep you occupied for the next decade.

A short clip from a rare Murray Rothbard lecture is also available, but I would encourage others to ask that the complete lecture on “Mises, Keynes, Friedman, Laffer: The Austrian Perspective” be made available.

The whole press conference is quite embarrassing for the economics profession.

Nouriel Roubini is very well connected in the world of the financial power elite, but that doesn’t mean he knows is ass from his elbow when it comes to Austrian economics. He tweets:

“The austerians’ Austrian austerity will not lead to Schumpeterian ‘creative destruction’ but rather ‘deadly destructive depression’”

First of all, modern day Austrians see Schumpeter as a marginal player when it comes to the Austrian school of economics.

The most significant thinkers in Austrian economics are Ludwig von Mises, Murray Rothbard and Friedrich Hayek. After these three, Carl Menger and Eugene von Bohm-Bawerk would be added to the list.

Second, there are no Austrian economists who would be in favor of the current austerity programs being called for in the PIIGS countries, by globalist organizations such as the IMF, World Bank and the OECD.

Austrians view the IMF etc. as bankster enforcers, who exist for one reason and one reason only, to ensure that the banksters are paid. Austrians view the current increased taxes, as part of austerity programs in PIIGS countries, with horror, and as the state taking by force from the people and handing the funds to the banksters.

Rather than banksters getting paid, Austrians would rather see the the PIIGS countries go into bankruptcy, default on their debt and free the people. The same view holds with regard to the Austrian position on US Treasury debt. Treasury default is the Austrian solution, not phony “austerity” programs of tax reform, aka tax increases, and government programs that are “paid for” by shuffling imaginary cuts in to later years. Bottom line: Austrians aren’t in favor the current size of government, anywhere. It’s not about austerity, but about eliminating the government money grab on behalf of banksters.

Austrians are also in favor of ending the social-welfare programs, so that the countries can again grow and prosper, but this has nothing to do with the current austerity programs proposed for the PIIGS. This is a position Austrians hold relative to all state social-welfare programs, regardless of the debt situation of a country.

Roubini is shockingly clueless with regard to Austrian economics and its position on the current eurozone crisis and the crisis in the United States.

What would Ludwig von Mises and FA Hayek say?

The Austrians Were Right

San Jose State University Assoc. Professor Jeffrey Rogers Hummel calls for exactly such a default:

But my major disagreement with Tyler [Cowen] and Arnold [Kling] is that I believe that a U.S. government default, rather than being “the end of the world,” could possibly be a good thing. I even advocated repudiating the national debt in a 1981 issue of CALIBER (the newsletter of the California Libertarian Party), long before predicting a default. My arguments were moral, economic, and political, and I would only soften them slightly today.

The moral argument for repudiation is easiest to follow although by itself says nothing about the practical results. Treasury securities represent a stream of future tax revenues, and investors have no more just claim to those returns than to any investment in a criminal enterprise. I favor total repudiation of all government debt for the same reason I favor abolition of slavery without compensation to slaveholders.

The economic argument depends on whether Ricardian Equivalence holds. Repudiating government debt eliminates future tax liabilities. To the extent that people correctly anticipate those liabilities, the value of private assets (including human capital) should rise over the long run by the same amount that the value of government securities falls. Thus, people will gain or lose depending how closely their wealth is associated with the State. If on the other hand, people underestimate their future tax liabilities, they suffer from a fiscal or “bond illusion” in which Treasury securities make them feel wealthier than they actually are. Debt repudiation will bring their expectations into closer alignment with reality, which should increase saving.

LVMI’s own Bob Murphy has made the same point:

There is a strong libertarian argument to be made that all tax revenues are stolen, and in that respect the government has no business “honoring” its debt at all.

Gary North has stated default will come, and that the vast majority of the people of the United States will benefit from it:

Liberty will receive a shot in the arm when this phrase provokes universal laughter: “The full faith and credit of the United States.” That day is fast approaching. The credit rating of the United States government will be marked down from AAA to AA. It will then be marked down to A. For every notch down that it falls, the national day of deliverance draws closer. American liberty is measured inversely to the credit rating of the United States government.

The President should hear from these voices and this rationale. I highly doubt he has even considered these arguments and would greatly benefit from a week at Mises University.