Austrian Economics

Folks,

In my classes I allude to Austrian Economics, as opposed to Chicago, or
Marxists, or Keynesian or monetarists, or supply-side... it is the
theoretical basis that makes the most sense to me.

I also mention the small biz international traders business is such that we
enjoy a windfall in our efforts, something beyond what our lifestyle
requires. this must be invested. These investments are often the source of
the wealth of the small biz int'l trader.

By following the Austrian School I managed to make money as the market went
up, and also as the market went down. If anyone wants to look into a solid
theory of econ, I recommend www.mises.org as a starting point. I've also
redesigned the class website with a few good links there too.

John

From http://www.dailyreckoning.com/

*** What happened to the U.S. budget surplus? As predicted in this
space..."U.S. Budget Surplus Gone", the BBC reported yesterday. The
Congressional Budget Office estimates that the U.S. will run a $21 billion
deficit in the fiscal year begun in October.

*** Barron's predicts a "new surge of high tech buying." This surge in
investment spending in new technology, says Barron's Eric Savitz, will
lift the entire economy.

*** But the Financial Times fails to see it. "Steep fall in investment
gives little sign of bouncing back," says yesterday's headline. Why?

"In a recent paper published by the IMF," continues the article, "Stefan
Oppers, an IMF economist, suggested that the current downturn might
be explained by the 'Austrian' theories of the economic cycle developed in
the first half of the 20th century.

"In that model, cheap money leads to over investment and bad investment,
which then has to be purged in a recession. Investment will not pick
up again until companies have adjusted their capital stock to match
consumer demand."

*** We agree with the FT. There is little hope for genuine improvement
until the recession has done its work. But as long as consumer
demand remains high - sales do not sink low enough to drench excess
capacity or wash out bad investments.

*** There is nothing wrong with this recession, we maintain, except that it
hasn't really happened yet.

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