Paul Krugman, winner of this year's Nobel prize in Economics, is a Keynesian. He therefore believes in central banking, counterfeit money, and government sponsored consumption boosts as a way to beat recessions. He thinks the Austrian school of Economics is a "religion." He ridicules the Austrian theory of the trade cycle.
Yet, this prize, which is awarded by the Swedish central bank, comes at a time when public confidence in central banking is on the wane – especially in America, where Ron Paul keeps rolling on. His is a grassroots political movement against the Fed, against the bailout, all based on Austrian economics.
As a believer in Austrian economics myself, all I can say about this year's Nobel prize in Economics is that it represents a last ditch effort to bolster Keynesianism and central banking. This is a time when all the world's governments are busy pumping new money into national economies, India included. The cartel of central bankers, led by the US Fed, thinks they can keep the inevitable depression at bay using such methods – and Krugman is a supporter of the 700 billion dollar "bailout." Yet, we Austrians know that all they can accomplish is only a mere postponement of a deep depression that will surely combine with hyperinflation when all the paper money becomes worthless.
Of course, time will tell who is right and who is wrong. Krugman will use his increased prestige to advocate more socialism in the US. He is a Democrat and will probably make it to high office under Obama, who is likely to win. In any case, as Lew Rockwell writes, he will be "a loyal propagandist for endless currency depreciation."
Those who believe in "sound money" based on gold will have to watch from the sidelines as worthless government papers lose value with every passing day. They will have to watch propagandists like Krugman enjoy fame and glory as the poorest of the poor are robbed by the inflationists.
This is not a good day for the science of Economics. A propagandist whose columns show outright political partisanship has won the Nobel. But then, this is a prize given by a central bank. What else should we expect?
Are you aware of any good resources on the monetary history of India? How strong was the "sound money" movement in India before the creation of RBI?
ReplyDeleteThe entire monetary history of British India has been recorded, and if you look around you will surely find it.
ReplyDeleteThere was no separate "sound money" movement in India: the entire focus was on England, where the "banking school" and the "currency school" debated the issue, which finally led Peel to pass the Banking Act of 1842, that stipulated all Bank of England notes must be convertible into gold on demand, but failed in its object, as Parliament had overlooked bank deposits. Banks created so much "deposit money" - to finance the railway boom - that convertibility had to be repeatedly suspended, until it was finally abandoned altogether. This sad story occupies many chapters of Murray Rothbard's "History of Economic Thought: Vol. 2".
Hope this helps.
Thanks for all that info. Will look around :)
ReplyDelete