This post in itself is a trap!
Good attempt to get a the hacker news readers interested in macroeconomy, but I'll not fall for it!
Good attempt to get a the hacker news readers interested in macroeconomy, but I'll not fall for it!
> Some links: http://www.voicesofliberty.com/article/a-beginners-guide-to-.... http://www.peakprosperity.com/forum/keynesian-vs-austrian-ec.... http://www.zerohedge.com/news/2014-09-22/illustrated-guide-k....
A few of the Austrian strawmen:
> http://theaustrianinsider.com/infographic-keynesian-vs-austr...
In this infographic, on the 'Austrian' side you have a chart that looks remarkably similar to the IS-LM model (Investment and Savings - Liquidity preference and Money Supply) which is a mathematical representation of Keynes' macroeconomic theory...
It also mentions that interest rates are key - well they aren't exactly ignored in the IS-LM model (it's perpetually on the Y-axis), nor in present day 'Keynesian' economics (pretty much every move the fed makes is described in terms of the target interest rate).
As for the cause of recessions, Austrians blame inflation, or asset-price 'bubbles'. Again, not exactly ground breaking. Why do you think central banks generally raise interest rates during times of high inflation? Today however, we barely even have inflation. And then another link is pedantic about the definition of 'inflation'.
The 'cure' for recessions is apparently to let them happen. This isn't a bad thought, however there IS a human cost. The region I live in Canada right now is going through a recession, what are the symptoms? Increased crime, increased domestic violence, increased suicide, higher poverty. And this is a country with a social net. It wouldn't get any better with 'laissez-faire' policies...
Anyhow, while so called 'Keynesians' are busy actually trying to be economists (both in industry and government), 'Austrian' economists are basically just whining about how they're marginalized, without offering up anything more than empty rhetoric and no answers.
And then the best straw-man of all: "Why did no one predict the housing crisis and subsequent recession?"
For the same reason "no one" predicts the crashes of individual stocks. Because people get caught up in the frenzy, ignore the voice of reason, and the smart money has already exited... If no one predicted the housing crisis, why did Goldman Sachs bet against it?
BTW, Keynes was a fairly successful investor, far more so than Hayek...
Speaking of investing, one of my favourite quotes: "Bulls make money, bears make money, but pigs just get slaughtered!"