Wednesday, May 13, 2009

Understanding economic crises

A great post from Not PC telling us about four myth-busting books, offered at the Mises Store about what actually happened in the Great Depression. We see Krugman finally starting to wake up to reality. PC answers a reader about what mainstream-economist don't know and gives us some Austrian-based answers to those questions. He answers questions like:
What caused the slump itself?
What caused the drop in demand?
How should businesses respond to such an economy-wide drop in demand?
In which part of the capital structure has the drop in demand been greatest?
What are the implications of a greater demand drop in the earlier part of the capital structure?
What is a capital structure?

It is a lesson in the real economics (the Austrian variety) and a must read for anybody concerned about the (rotten) state of affairs in the world today. With free-market capitalism under attack (ironic, since it went out of fashion long time back), we have a unique situation where the patient is hell-bent on kicking the very medicine which will cure him. Here we have Dr. PC telling us about the cure and why we should stop listening to the quacks (Krugmen and his tribe).

I loved the quote by Mark Brandly: "If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables."


PC said...

Thanks for your gracious comments, Rajesh.

"Dr" PC