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Austrians are NOT for financial “deregulation”

I have not met one Australian who understands Austrian economics

99% of economists have no idea about Austrianism.

The five (including Steve Keen) who do know something about it don’t like it.

Some think it’s just another extreme form of “free market” capitalism.

Some think it’s just about returning to an “old” gold standard.

Some think it’s about anarchism.

Some think it’s pro-deregulation everything.

Some (like “Phil” in the Steve Keen post below) link Austrianism with fascism, using one sentence from von Mises’ millions of sentences on human action to “prove” Austrianism is sympathetic to fascism.  Austrianism (despite its name) has nothing whatever to do with 20th century fascism.  Mises had to flee fascist Europe.  Austrianism is more “sympathetic” to libertarianism (and classical liberalism and possibly anarchism in its extreme form) than any other political philosophy.

In attempt to kill off the slander and libel over Austrianism:

1.  Austrians do NOT support financial deregulation

Financial deregulation means for most people what Dr John Hewson called for recently in the AFR:  More competition in banking, the entry of foreign banks, lower interest rate margins, more non-bank lenders.

This is deregulation WITHIN a monopoly fiat paper money system.  Modern banking is nothing other than a simple form of recursive embezzlement.  To allow competition to see who can lie and embezzle “the best” is MADNESS.

Austrians call for one of the following:

(a) the outlawing of fractional reserve banking;

(b) the abolition of the “definition of a moral hazard” (central banking) and simultaneous implementation of free banking (possibly after resolution or nationalisation and then re-sale of insolvent or TBTF banks); or

(c) if either of these is not possible, the HEAVY regulation of cartel banking – in particular the highest possible reserve ratio enforced by government to minimise the deliterious effects of the Ponzi-like activity.

[(d) no Austrian I know supports this fourth option, but I do:  Nationalisation is preferable to the current system, so I would prefer nationalisation of the banking system compared to the current system we now have.  I base my analysis on Hoppe’s critique of democracy – you do not want competition in the production of “bads” and given banking produces “bads” it is better to have an inefficient govt-owned monopoly producing “bads” rather than competition in the produciton of “bads”.  But this is not a common Austrian position.]

You don’t believe that Austrians are against financial deregulation? 

Read this, from the Austro-Libertarian website, LRC.  You will never see such an article in the WSJ , the AFR, the Economist or any other supposedly “free market” mainstream publication.  The mainstream free marketeers are quiet on central banking and free banking.  They are deadly quiet, because they know to talk about it means the death of their careers.  So they shut up.  Only Austrians dare to raise this issue against the money trusts.

Noted Austrian Ron Paul did not support the repeal of Glass-Steagall in the US for these very reasons.  That alone should be proof enough.

2.  Austrians do not want to deregulate everything that moves immediately

A corollary to the first point is that Austrians clearly do not want to deregulate indiscriminately.  Order matters. 

Austrians do NOT support the deregulation of banking WITHOUT the abolition of legal tender laws and the central bank FIRST.

Austrians do NOT support elimination of the minimum wage and all social security benefits whilst at the same time allowing bailouts for the banking system and billion dollar bonuses to Goldman Sachs.

Austrians do NOT support the destruction of family farms into major industrial farms when the central bank supported financial institutions are bankrupting the small farmers and financing the large agricultural corporations.

The order matters.  Austrians focus on the abolition of the central bank, returning banking to a “normal” market function rather than a symbiotic tool of the State, and a return to a free market in money, allowing any currency to be chosen by the people to act as money.  We believe it’s likely gold will be chosen but are open the market deciding.  We believe good outcomes will result when the market is given the opportunity to innovate and supply new money products in a GENUINELY free market.

There is nothing more basic to the economy than its unit of exchange.  Corrupt that, and the whole economy is corrupted.  Austrians are the only economists who see how monopoly money is inefficient, how it is fundamentally corrupt and how it needs to change.

Anyone who characterises Austrians as just another group of free market capitalists should think carefully.  And read Rothbard before parroting that kind of idiocy again.

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