Internet Austrians

The Fed didn’t raise rates.

Ambrose Evans-Pritchard was bound to comment on this (along with offering his obligatory derogatory comment about Austrians), and he has not disappointed.  I will keep this short, as only yesterday I commented on his post in which he approves of governments issuing greenbacks (apparently Macquarie is calling for a similar elixir).  So I don’t want to spend too much of my energy and your time on dissecting another AEP paean to the gods of central banking.

The argument that zero rates are unhealthy and impure is to let Calvinist psychology intrude on the hard science of monetary management.

Capital at zero cost is certainly unhealthy.  I don’t believe Calvin had anything to say about this, though.  Anyway, who knew monetary management was a hard science?  Does AEP mean hard science?

Any of the natural or physical sciences, as chemistry, biology, physics, or astronomy, in which aspects of the universe are investigated by means of hypotheses and experiments.

He must not mean this.  There is no testing via experiments – there is no testing!  It is just an experiment, sans testing.  He must mean hard, as in difficult.  Of this, there is no doubt.  But I wouldn’t call it a science – more like voodoo, or divining.

The chorus of demands – and just from ‘internet-Austrians’ – that rates should be raised in order to build up reserve ammunition in case they need to be cut later, is a line of reasoning that borders on insanity.

First, I think he must be missing the word “not” in the above, as in “and not just from ‘internet Austrians.’”  Because many people not associated directly with Austrian economics have said such things.

On the other hand, any Austrian worthy of the name (internet or otherwise) would not advise what a central bank should do.  If asked for an opinion, they would say that there should be no central bank.

There was also an equity crash on the Shanghai and Shenzhen casinos, though this is of no relevance beyond puncturing the illusion that the Chinese authorities known what they are doing. Self-evidently they do not.

Ambrose offers that Chinese authorities don’t know what they are doing, yet…

…the immediate implication is that data from China will soon start looking a great deal better, lifting the whole world out of its summer sulk.

Consider what he is saying: idiots can run monetary policy and regulate the banks and it makes no difference – the economy will perform just fine; fine enough to save the world!  The gods of Ambrose = idiots.

…the Fed is damned if it does, and damned if it does not, for by recoiling yet again it may well be storing up a different kind of crisis next year.

Finally, something we can agree on – may the Fed be damned.

Nobody said central banking was easy.

Austrians certainly never said it was easy.  Austrians never even said it was hard.  It is impossible.  It is central planning.  And to expect good outcomes from central planning is to worship false gods.

And may those who worship false gods be damned.