Two schools of economics competed in the mid-20th century, Keynesianism and the Austrian School of Economics.

The Austrian school advocates strict adherence to individualism, the concept that social phenomena like the economy result only from the motivations and actions of individuals. Thus, economic theory should be exclusively derived from principles of individual human action.

Keynesianism, on the other hand, advocates for top-down economic control, a management of the economy and business cycle through government spending and interest rate policy.

The ideas of John Maynard Keynes won the Halls of Power because they allow governments to print, borrow, and spend. This power is enormously destructive, miring us now at the end of a 50-year credit binge fueled by mal-investment (wasteful spending on largely doomed projects that would be undertook if not for artificially suppressed interest rates, i.e., debt).

Meanwhile, Austrian Business Cycle theory perfectly explains the consequences of their actions – boom, bubble, and bust.

As the great Ludwig von Mises wrote in the 1940s, “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system”.

Today, we stand at the edge of that 50-year credit binge, we face only voluntary abandonment of money-printing (resulting in a temporary but deep depression) or a total collapse of the currency (hyperinflation).

This tug-of-war will play out over years, disrupting job, stock, bond and real estate markets, convulsing to every schizophrenic move of the Federal Reserve. This will create ample opportunity for the well-prepared while wiping out many. It’s critical to understand what’s happening through the Austrian lens. We help your family do that through story.