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Austrians Don’t Blow Bubbles

April 3, 2013 in Economics

By Mark Thornton

Harry Veryser’s new book It Didn’t Have to Be This Way: Why Boom and Bust Is Unnecessary—and How the Austrian School of Economics Breaks the Cycle is reviewed by John Zmirak. He write:

What boggles the mind is how Harvard MBAs, Wharton professors, Federal Reserve chairmen, and other types who convene at places like Davos to plan the global future could have believed things would turn out differently. What would make someone think that worthless loans, all mooshed together then sliced thin and sold, would somehow acquire value? Did these people believe in magic? Statists like Paul Krugman and Alan Blinder who failed to see this catastrophe coming are emerging from the woodwork now to explain in retrospect that this implosion was the result of too little regulation—the natural outcome of free-market greed, unguided by the visible hand of Uncle Sam. Veryser shows that this diagnosis is pristinely, perfectly wrong, like an autopsy report that blames a lung cancer death on “not enough cigarettes to kill the tumor.”

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