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A Free Market Is Not Possible Without Strong Laws Against Fraud

A Free Market Is Not Possible Without Strong Laws Against Fraud Many economists are now starting to question long-held assumptions that bubbles don’t matter, that huge amounts of leverage are good, and that the Federal Reserve has mastered monetary policy. They are starting to read Minsky and other forgotten economic theorists. And Austrian economists are gaining a wider audience. As I wrote in March 2009: The Austrians have been saying for well over a hundred years that big bubbles lead to big crashes, and that – if you want to avoid depressions – you have to avoid the bubbles.

In today’s article, entitled “Ignoring the Austrians Got Us in This Mess”, Barron’s agrees: The credit crisis and the ensuing global economic contraction have failed to make an impression on academe, where free-market orthodoxy still reigns supreme, the New York Times asserted in an article in arts section recently (“Ivory Tower Unswayed by Crashing Economy,” March 4.)…

What definitely is ignored in academe is the Austrian school of economics, especially for baby boomers brought up on Samuelson’s economics text, which was pure Keynesian orthodoxy. I did not learn the names von Mises and Hayek or their ideas until a decade or more after graduation (with a degree in economics, by the way.)

The Austrian view is a mirror image on the right to Minsky’s from the left. The economy, if left alone, is self-correcting, say the Austrians. But

http://www.zerohedge.com/article/free-market-not-possible-without-strong-laws-against-fraud

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