Friday, April 3, 2009

Pat Buchanan becomes an Austrian

Pat Buchanan has a great column today at Human Events. He has apparently just read Tom Woods' Meltdown. A little secret: Tom Woods is an Austrian economist. Pat Buchanan seems to have discovered the Austrian Business Cycle Theory for the first time. The fact that the book has made the New York Times Best Sellers list (#18), and the fact that mainstream Republican thinkers are embracing it, is a good sign.

He seems most taken with Woods' account of the severe 1920-21 depression, where the U.S. quickly got out of it by doing what? NOTHING!

The "forgotten depression" of 1920-21 was caused by a huge increase in the money supply for President Wilson's war. When the Fed started to tighten at war's end, production fell 20 percent from mid-1920 to mid-1921, far more than today.

Why did we not read about that depression?

Because the much-maligned Warren Harding refused to intervene. He let businesses and banks fail and prices fall. Hence, the fever quickly broke, and we were off into "the Roaring Twenties."

He also rebuts the myth that Herbert Hoover was a laissez faire ideologue who refused to intervene as the economy began to tank

Herbert Hoover, contrary to the myth that he was a small-government conservative, renounced laissez-faire, raised taxes, launched public works projects, extended emergency loans to failing businesses and lent money to the states for relief programs.

Hoover did what Obama is doing.

Indeed, in 1932, FDR lacerated Hoover for having presided over the "greatest spending administration in peacetime in all of history." His running mate, John Nance Garner, accused Hoover of "leading the country down the path to socialism." And "Cactus Jack" was right.

Finally, he gets to the myth that World War II ended the great depression:

But how can an economy be truly growing 13 percent a year, as the economists claim, when there is rationing, shortages everywhere, declining product quality, an inability to buy homes and cars, and a longer work week? When the cream of the labor force is in boot camps or military bases, or storming beaches, sailing ships, flying planes and marching with rifles, how can your real economy be booming?

It was 1946, a year economists predicted would result in a postwar depression because government spending fell by two-thirds, that proved the biggest boom year in all of American history.

With this finale:

Should not this creature from Jekyl Island [The Federal Reserve], for all its manifold crimes and sins against the republic, also be summarily put to death?

Yes Pat, let's end the Fed.

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