...here, on this blog, since he has me blocked from his comment section because of the audacity of expecting a little more justification from him when he accuses people of being "reeking sewer rats from the bowels of Russia" (yes, that's a direct quote).
Here he shares more evidence of something I think most people who think about and discuss Austrian economics on at least an intermittent basis already know: that by the second half of the twentieth century Hayek was saying that it was a good idea to maintain nominal spending levels during a depression.
I feel like Greg tries to bring attention to this point in a variety of fora because he's under the impression people aren't aware of it. Certainly many aren't, but I think most of the people he shares this with are already well aware of this view of Hayek. We are more focused on two questions, which seem more important from the perspective of intellectual history and modern policy analysis:
1. How, in the period when Hayek was actually working on macroeconomics in the 1930s, could he have missed this? Exactly why did it take until later in the century?, and
2. Why, then, do modern Hayekians still heap so much scorn on us over active monetary policy? Clearly you all would rather have free banking. But that doesn't seem like it should keep you - in the midst of a depression where we seem stuck with a central bank - from joining us in advocating for more vigorous stimulus.
Greg, let's say most of us get that Hayek thought this in the 1970s. Your intellectual history mission is for the most part accomplished. Now can you dedicate a few blog posts to cutting IOR to zero, expanding open market operations, and announcing a nominal spending level target? John Papola, since the fall of 2011, is now telling me semi-regularly in emails that Hayek supports NGDP targeting. Great. So does that mean the next EconStories video will be advocating monetary expansion, with Ben Bernanke as the good guy? Does that mean his next Fortune column will be strongly supporting monetary stimulus until the economy is back on track?
If not, why not?
And if you guys want to stick with the intellectual history, then let's call it "case closed" on what Hayek thought in the 1970s, and turn our attention to why he didn't say this as emphatically in the 1930s. (Yes, I know about the letter to the Times where he and several other LSE economists say deflation isn't good for its own sake... but why wasn't the maintenance of nominal spending more prominent in his macroeconomics).
Populist Backlash and Political Economy
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