Jump to content

Austrian predictions: Difference between revisions

From The Austrian Economics Wiki, the global repository of classical-liberal thought
← Older edit
Checked a few, a few more to go.
 
(30 intermediate revisions by 3 users not shown)
Line 1: Line 1:
This page attempts to list various predictions made by Austrian economists about important economic and other developments. '''UNDER CONSTRUCTION.'''
This page attempts to list various predictions made by Austrian economists about important economic and other developments.


'''Important note:''' Austrian economists, as Austrian economists, or [[Praxeology|praxeologists]], do not predict. They can predict not as formal economists, or praxeologists, but, rather, in their role as [[Thymology|thymologists]], or economic historians. In praxeology, A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the "A will necessarily lead to B" type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety.<ref name="Block_Thymologists">Walter Block. [http://www.lewrockwell.com/block/block168.html Austrian Thymologists Who Predicted the Housing Bubble], ''LRC.com'', December 22, 2010. Referenced 2011-11-29.</ref>
'''Important note:''' Austrian economists, as Austrian economists, or [[Praxeology|praxeologists]], do not predict. They can predict not as formal economists, or praxeologists, but, rather, in their role as [[Thymology|thymologists]], or economic historians. In praxeology, A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the "A will necessarily lead to B" type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety.


With this in mind, it is interesting that Austrian economists have been quite successful at predicting major events.<ref name="Block_Thymologists">Walter Block. [http://www.lewrockwell.com/block/block168.html Austrian Thymologists Who Predicted the Housing Bubble], ''LRC.com'', December 22, 2010. Referenced 2011-11-29.</ref>
{{TOC right}}
==The Great Depression==
==The Great Depression==
The [[Great Depression]] was predicted by several Austrian economists...
The [[Great Depression]] was predicted by several Austrian economists:


*  
* In Austria, economist [[Ludwig von Mises]] saw the problem developing in its early stages and predicted to his colleagues in 1924 that the large Austrian bank, [[Creditanstalt]], would eventually crash. He wrote a full analysis of [[Irving Fisher|Irving Fisher’s]] monetary views, published in 1928, where he targeted Fisher’s reliance on price indexes as a key vulnerability that would bring about the Great Depression, concluding: "because of the imperfection of the index number, these calculations would necessarily lead in time to errors of very considerable proportions."<ref name="Mises_Causes">Ludwig von Mises. [http://mises.org/resources/3361 "The Causes of the Economic Crisis, and Other Essays Before and After the Great Depression"], collection of works reposted from 1923 and 1928. Referenced 2011-01-12.</ref><!-- could use more actual quotes, but good. Original source said to be: Mises, Ludwig von. [1928] 1978. Geldwertstabilisierung and Konjunkturpolitik [Monetary Stabilization and Cyclical Policy]. Jena: Gustav Fischer. English translation by Bettina Bien Greaves: in On the Manipulation of Money and Credit. Dobbs Ferry, NY: Free Market Books. ) But see also [http://mises.org/resources/3361 this] (recommended [http://www.lewrockwell.com/thornton/thornton21.html here]) -->
* [[F. A. Hayek]] published several articles in early 1929 in which he predicted the collapse of the American boom.{{Citation needed|Could really use the original resource}}  [[Felix Somary]], who like Mises was a student at the University of Vienna, issued several dire warnings in the late 1920s.{{Citation needed|Could really use the original resource}}<ref name="Thornton_Mises">Mark Thornton. [http://mises.org/journals/scholar/Thornton16.pdf "Mises vs. Fisher on Money, Method, and Prediction: The Case of the Great Depression"] (pdf), p.13-15; December 2006. Referenced 2011-12-13.</ref>
* In America economists [[Benjamin Anderson]] and [[E.C. Harwood]] also warned that the Federal Reserve policies would cause a crisis, and like Somary, they were largely ignored.<!-- (Skousen, Mark 1991. Economics on Trial: Lies, Myths, and Realities, Homewood, IL: Business One Irvin. p. 104-6) --><ref name="Thornton_Mises" /> Albert H. Wiggin summed up in 1931 that the "depression has been prolonged and not alleviated by delay in making necessary readjustments."<ref name="Rothbard_Wiggin">Murray N. Rothbard. [[America's Great Depression]], Chapter 9, referenced 2011-01-11.</ref>


==Dot-com bubble==
==Post-WWII recovery==
Did anybody predict the [[Dot-com bubble]]?
In the 1945 symposium ''Financing American Prosperity'', several prominent economists discussed the financial and other economic problems of the transition after [[World War II]] and suggested solutions. With the exception of [[Benjamin Anderson]], who called for "drastic economies in the postwar period" and insisted that "proposals for expanding federal expenditures after the war must be fought all along the line", the contributors all advocated a scope of federal expenditures much larger than that before the war.<ref name="Financing_Prosperity">Contributors: Benjamin M. Anderson, John Maurice Clark, Howard S. Ellis, Alvin H. Hansen, Sumner H. Slichter and John H. Williams. Editors: Paul T. Homan, Fritz Machlup.  [[Financing American Prosperity]], A Symposium of Economists. The Twentieth Century Fund, first published October 1945. Referenced 2012-05-04.</ref>
*


<!--
The "Depression of 1946" may be one of the most widely predicted events that never happened in American history. As the war was winding down, leading Keynesian economists of the day argued, as [[Alvin Hansen]] did, that "the government cannot just disband the Army, close down munitions factories, stop building ships, and remove all economic controls." After all, the belief was that the only thing that finally ended the Great Depression of the 1930s was the dramatic increase in government involvement in the economy. However, the government canceled war contracts, and its spending fell from $84 billion in 1945 to under $30 billion in 1946. By 1947, the government was paying back its massive wartime debts by running a budget surplus of close to 6 percent of GDP. The military released around 10 million Americans back into civilian life. Most economic controls were lifted, and all were gone less than a year after V-J Day. In short, the economy underwent what the historian Jack Stokes Ballard referred to as the "shock of peace."
About the Fed seeing the bubble but denying it: http://www.freerepublic.com/focus/f-news/1362529/posts (full article hard to find)


Paul, Ron. 2000. "[http://ronpaulforcongress.com/html/republic.html A Republic, If You Can Keep It]" January 31
If the wartime government stimulus had ended the Great Depression, its winding down would certainly lead to its return. At least that was the consensus of almost every economic forecaster, government and private. In August 1945, the Office of War Mobilization and Reconversion forecast that 8 million would be unemployed by the spring of 1946, which would have amounted to a 12 percent unemployment rate. In September 1945, Business Week predicted unemployment would peak at 9 million, or around 14 percent. Leo Cherne of the Research Institute of America and Boris Shishkin, an economist for the American Federation of Labor, forecast 19 and 20 million unemployed respectively — rates that would have been in excess of 35 percent!
- prediction?


-->
After the Second World War, unemployment rates, artificially low because of wartime conscription, rose a bit, but remained under 4.5 percent in the first three postwar years — below the long-run average rate of unemployment during the 20th century. Some workers voluntarily withdrew from the labor force, choosing to go to school or return to prewar duties as housewives. But, many who lost government-supported jobs in the military or in munitions plants found employment as civilian industries expanded production—in fact civilian employment grew, on net, by over 4 million between 1945 and 1947. Household consumption, business investment, and net exports all boomed as government spending receded.<ref name="Taylor_Stimulus">Jason E. Taylor and Richard K. Vedder. [http://www.cato.org/pubs/policy_report/v32n3/cpr32n3-1.pdf "Stimulus by Spending Cuts: Lessons from 1946"] (pdf), ''Cato Policy Report'', May/June 2010, Vol. XXXII No.3, referenced 2012-05-04.</ref>


==Housing bubble==
==End of the Bretton Woods system==
During and after the burst of the [[Dot-com bubble]], these economists predicted the 2000s housing bubble that culminated in the [[Great Recession]] from 2008 onward.
The collapse of the [[Bretton Woods System]] and the following rise of the gold price has been predicted by several Austrian economists and is covered in the following:


Anderson, 2001, 2003, 2007; Beale, various dates; Blumen, 2002, 2005; Corrigan, tba; Crovelli, 2006; DeCoster, 2003; DiLorenzo, 1999; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; Mayer, 2003; Murphy, 2007, 2008; North, 2002, 2005; Paul, various dates, 2000, 2002; Polleit, 2006; Ptak, 2003; Rockwell, 2008, 462; Rogers, 2005; Rothbard, tba; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2006D, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004, 2009, Undated; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography).
* Rothbard, Murray. 1962. [[The Case for a 100 Percent Gold Dollar]] <!--
Could use more examples of the who and where predicted what.


Anderson, William L. 2001. "[http://mises.org/daily/617 The Party is Over]," February 20 <!-- more of a summary of the preceding boom and a hint about a coming bust -->


Anderson, William L. 2003. "[http://mises.org/daily/1265 Recovery or Boomlet?]" July 07 <!-- noting the temporary is not a recovery -->
The minority of gold standard advocates during the 1960s were almost all friends and followers of the great Austrian school economist Ludwig von Mises. Mises himself, and such men as Henry Hazlitt, DeGaulle’s major economic adviser Jacques Rueff, and Michael Angelo Heilperin, pointed out that, as the dollar continued to inflate, it had become absurdly undervalued at $35 an ounce. Gold was worth a great deal more in terms of dollars and other currencies, and the United States, declared the Misesians, should return to a genuine gold standard at a realistic, much higher rate. These Austrian economists were ridiculed by all other schools of economists and financial writers for even mentioning that gold might even be worth the absurdly high price of $70 an ounce. The Misesians predicted that the Bretton Woods system would collapse, since relatively hard money countries, recognizing the continuing depreciation of the dollar, would begin to break the informal gentleman’s rules of Bretton Woods and insistently demand redemption in gold that the United States did not possess.


Anderson, William L. 2007. "[http://mises.org/daily/2675 The Party is Over – Again]," August 30 <!-- predicts the coming stock market meltdown -->
There can be no genuine laboratory experiments in human affairs, but we came as close as we ever will in 1968, and still more definitively in 1971. Here were two firm and opposing sets of predictions: the Misesians, who stated that if the dollar and gold were cut loose, the price of gold in ever-more inflated dollars would zoom upward; and the massed economic Establishment, from Friedman to Samuelson, and even including such ex-Misesians as Fritz Machlup, maintaining that the price of gold would, if cut free, plummet from $35 to $6 an ounce.


Armentano, Dominick. 2004. "[http://www.cato.org/pub_display.php?pub_id=2510 Memo to Federal Reserve: Increase Interest Rates Now!]" <!-- notes the rise of the housing bubble and foretells a bust -->
Flouting all the predictions of the economic Establishment, there was no contest as between themselves and the Misesians: not once did the price of gold on the free market fall below $35. Indeed it kept rising steadily, and after 1971 it vaulted upward, far beyond the once seemingly absurdly high price of $70 an ounce. -->


Beale, Theodore. 2009. "[http://superstore.wnd.com/books/WND-Books/The-Return-of-the-Great-Depression-Autographed-Hardcover "The Return of the Great Depression"] <!-- according to the book description, the then unfolding recession will be much larger than expected -->
* Hazlitt, Henry. 1934 until 1946 [http://mises.org/resources/3967 From Bretton Woods to World Inflation: A Study of Causes and Consequences] (editorials for New York Times) <!-- see [http://mises.org/daily/4511/Hazlitts-Battle-with-Bretton-Woods here] for a summary, would be nice to find the actual NYT editorials -->


Blumen, Robert. 2002. "[http://mises.org/daily/986 Fannie Mae Distorts Markets.]" Mises Daily, June 17 <!-- spells out the effect of Fannie and Freddie on the housing market, shows the systemic risk and foresees the coming bailout -->
==Savings and loan crisis==
In his 1982 [http://mises.org/rothbard/agd/introduction.asp#fourth introduction] to [[America's Great Depression]], Murray Rothbard predicted the [[Savings and loan crisis]] and hinted at [[Black Monday (1987)|trouble in the stock market]]:


Blumen, Robert. 2005. "[http://blog.mises.org/3566/housing-bubble-are-we-there-yet/ Housing Bubble: Are We There Yet?]" May 8 <!-- documents rise of the bubble with many resources -->
: "... The fact that Reaganomics cannot bring down interest rates for long puts a permanent brake on the stock market, which has been in chronic trouble since the mid-1960s and is increasingly in shaky shape. The bond market is already on the way to collapse. The housing market has at last been stopped short by the high mortgage rates, and the same has happened to many collectibles. Unemployment is chronically higher each decade, and is now at the highest since the Great Depression, with no sign of improvement. The accelerating inflationary boom of the three decades since the end of World War II has loaded the economy with unsound investments and with an oppressive mountain of debt: consumer, homeowner, business, and international. In recent decades, business has in effect relied on inflation to liquidate the debt, but if "disinflation" (the lessening of inflation in 1981 and at least the first half of 1982) is to continue, what will happen to the debt? Increasingly, the answer will be bankruptcies, and deeper depression. The bankruptcy rate is already the highest since the Great Depression of the 1930s. [[Savings and loan association|Thrift institutions]] caught between high interest rates to their depositors and low rates earned on long-time mortgages, will increasingly become bankrupt or be forced into quasi-bankrupt mergers with other thrifts which will be dragged down by the new burdens. Even commercial banks, protected by the safety blanket of the FDIC for half a century, are now beginning to go down the drain, dragged down by their unsound loans of the past decade."
<!--
Full paragraph:
: "But if Reaganomics is doomed to be a fiasco, what is likely to happen? Will we suffer a replay, as many voices are increasingly predicting, of the Great Depression of the 1930s? Certainly there are many ominous signs and parallels. The fact that Reaganomics cannot bring down interest rates for long puts a permanent brake on the stock market, which has been in chronic trouble since the mid-1960s and is increasingly in shaky shape. The bond market is already on the way to collapse. The housing market has at last been stopped short by the high mortgage rates, and the same has happened to many collectibles. Unemployment is chronically higher each decade, and is now at the highest since the Great Depression, with no sign of improvement. The accelerating inflationary boom of the three decades since the end of World War II has loaded the economy with unsound investments and with an oppressive mountain of debt: consumer, homeowner, business, and international. In recent decades, business has in effect relied on inflation to liquidate the debt, but if "disinflation" (the lessening of inflation in 1981 and at least the first half of 1982) is to continue, what will happen to the debt? Increasingly, the answer will be bankruptcies, and deeper depression. The bankruptcy rate is already the highest since the Great Depression of the 1930s. [[Savings and loan association|Thrift institutions]] caught between high interest rates to their depositors and low rates earned on long-time mortgages, will increasingly become bankrupt or be forced into quasi-bankrupt mergers with other thrifts which will be dragged down by the new burdens. Even commercial banks, protected by the safety blanket of the FDIC for half a century, are now beginning to go down the drain, dragged down by their unsound loans of the past decade."
-->


Blumen, Robert. 2004. [http://www.lewrockwell.com/orig3/blumen4.html "All Real Estate, All the Time"]. March 8 <!-- housing as the unstable driver of economic activity in the US -->
==Dot-com bubble==
{{Main|Austrian predictions/Dot-com bubble}}
The [[Dot-com bubble]] and its bust was foreseen by several Austrian economists.<ref name="Thornton_Bubble">Mark Thornton. [http://www.independent.org/pdf/tir/tir_09_1_1_thornton.pdf "Who Predicted the Bubble? Who Predicted the Crash?"] (pdf), ''The Independent Review'', v. IX, n. 1, Summer 2004, ISSN 1086-1653, Copyright © 2004, pp. 5–30. Referenced 2011-12-13.</ref> In October, 1999, [[Sean Corrigan]] pointed out a massive bubble and implied it will burst. He compared the conditions to those during the late summer of [[Black Monday (1987)|1987]], the [[Japanese asset price bubble|Japanese bubble]] of the late 1980s, and the "[[roaring Twenties]]" in the United States. <ref name="Corrigan_Pop">Sean Corrigan. [http://mises.org/daily/317 "Will the Bubble Pop?"], ''Mises Daily'', October 18, 1999. Referenced 2012-01-08.</ref> In March, 2000, [[Christopher Mayer]] noted that all the ingredients of a bubble - fundamental (i.e., a technological revolution), financial (i.e., a surge in money and credit) and psychological (i.e., a suspension of belief in traditional valuation measures) - appear to exist in the current bull market and predicted it will end with a bust.<ref name="Mayer_Over-Valued">Christopher Mayer. [http://mises.org/daily/405 "The Meaning of 'Over-Valued'"], ''Mises Daily'', March 30, 2000. Referenced 2011-12-13.</ref> In August, 2000, [[William Anderson]] pointed to the bubble in the high-technology sector, mentioned the negative consequences of a regulatory attack at Microsoft<ref name="Anderson_Delusion">William L. Anderson. [http://mises.org/freemarket_detail.aspx?control=316 "New Economy, Old Delusion"], ''The Free market'', August 2000, Volume 18, Number 8. Referenced 2012-01-08.</ref> (which was analyzed a year earlier by [[Thomas DiLorenzo]]<ref name="DiLorenzo_Sneak">DiLorenzo, Thomas J. [http://mises.org/daily/297 "Regulatory Sneak Attack."], ''Mises Daily'', September 16, 1999. Referenced 2012-01-08.</ref>). There were others.


Crovelli, Mark R. 2006. "[http://www.kitco.com/ind/crovelli/may312006.html Gold, Inflation, And... Austria?]" May 31 <!-- summarizes the ABCT and says commercial and residential real estate markets are poised to rupture violently -->
'''Reference shortlist:'''<br>
<small>Anderson, 2000; Corrigan, 1999; Deden, 1999; DiLorenzo, 1999; Grant, 1996A, 1996B; Hülsmann, 2000; Mayer, 2000; Paul, 2000; Reisman, 1999; Sennholz, 2000; Shostak, 1999; Thornton, 2000.</small>


De Coster, Karen. 2003. "[http://karendecoster.com/the-house-that-greenspan-built-irrationally-exuberant-wall-street-welfare-parasites-and-their-fed-god.html The House that Greenspan Built: Irrationally Exuberant Wall Street Welfare Parasites and Their Fed-God.]" September 12 <!-- really just a series of links to other resources -->
* Anderson, William. 2000. "[http://mises.org/freemarket_detail.aspx?control=316 New Economy, Old Delusion.]" The Free Market, August
* Corrigan, Sean. 1999. "[http://mises.org/daily/317 Will the Bubble Pop?]", October 18
* Deden, Anthony. 1999. "[http://www.safehaven.com/article/778/reflections-on-prosperity Reflections On Prosperity]" December 29
* DiLorenzo, Thomas J. 1999. "[http://mises.org/daily/297 Regulatory Sneak Attack.]" September 16
* Grant, James. 1996A. The Trouble with Prosperity, May
* Grant, James. 1996B [http://mises.org/journals/aen/aen16_4_1.asp The Trouble with Prosperity], Winter 1996, Interview
* Hülsmann, Jörg G. 2000. Schöne neue Zeichengeldwelt
* Mayer, Christopher. 2000. "[http://mises.org/daily/405 The Meaning of 'Over-Valued']", March 30.
* Paul, Ron. 2000. "[http://ronpaulforcongress.com/html/republic.html A Republic, If You Can Keep It]" January 31
* Reisman, George. 1999. "[http://mises.org/daily/284 When Will the Bubble Burst?]", August 18
* Sennholz, Hans. 2000. "[http://mises.org/daily/477 Can the Boom Last?]", July 31
* Shostak, Frank. 1999. "[http://mises.org/daily/309 Inflation, Deflation, and the Future]". October 7
* Thornton, Mark. 2000. "[http://www.independent.org/pdf/tir/tir_09_1_1_thornton.pdf Who Predicted the Bubble? Who Predicted the Crash?]" (pdf), ''The Independent Review'', Summer 2004


DiLorenzo, Thomas J. 1999. "[http://mises.org/daily/297 Regulatory Sneak Attack.]" September 16 <!-- about the effects of sudden regulatory changes -->
==Housing bubble==
 
{{Main|Austrian predictions/Housing bubble}}
Duffy, Kevin. 2005A "[http://www.lewrockwell.com/orig5/duffy2.html The Super Bowl Indicator,]" February 5 <!-- likens the boom to the dot-com bubble, hinting that the result will be the same -->
During and after the burst of the [[Dot-com bubble]], numerous economists predicted the 2000s housing bubble that culminated in the [[Great Recession]] from 2008 onward.
 
Duffy, Kevin. 2005B. "[http://www.lewrockwell.com/orig5/duffy3.html Honey, I Shrunk the Net Worth]," March 3 <!-- likens the boom to the dot-com bubble, hinting that the result will be the same -->
 
Duffy, Kevin. 2005C. "[http://www.lewrockwell.com/orig5/duffy4.html Alan, We Have a Problem,]" August 2 <!-- about the bubble reaching its peak, hinting at trouble -->
 
Duffy, Kevin. 2005D. "[http://www.lewrockwell.com/orig5/duffy5.html Panic Now and Beat the Rush,]" September 24 <!-- about the coming financial storm -->
 
Duffy, Kevin. 2006. "[http://www.lewrockwell.com/orig5/duffy8.html Are Mortgage Borrowers Rational?]" June 24 <!-- about the irrationality of crowds -->
 
Duffy, Kevin. 2007A. "[http://www.lewrockwell.com/duffy/duffy10.html It’s a Mad, Mad, Mad, Mad World,]" May 22 <!-- monitors the progress of the bubble -->
 
Duffy, Kevin. 2007B. "[http://www.bearingasset.com/media/media_barrons_20070618.pdf For Whom Do the Bells Toll?]" Barron’s, June 18 <!-- bubble in the stock markets -->
 
Duffy, Kevin. 2007C. "[http://www.lewrockwell.com/duffy/duffy11.html Financial Markets on Crack,]" August 22 <!-- bubble bursting despite Fed interventions -->
 
Duffy, Kevin. 2007D. "[http://www.lewrockwell.com/duffy/duffy12.html Mr. Mozilo Goes to Washington,]" September 15 <!-- about the outlook for Countrywide -->
 
Economics of contempt. 2008. "[http://economicsofcontempt.blogspot.com/2008/07/official-list-of-punditsexperts-who.html The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble.]" July 16 <!-- documents precisely what it says -->
 
Englund, Eric. 2004. "[http://www.lewrockwell.com/englund/englund13.html Monetizing Envy and America’s Housing Bubble]". July 19 <!-- interventions in the housing market since 1934, mortgage defaults will rise dramatically -->
 
Englund, Eric. 2005A. "[http://www.lewrockwell.com/englund/englund24.html Houses Are Consumer Durables, Not Investments,]" June 8 <!-- what it says; the bubble shall burst -->
 
Englund, Eric. 2005B. "[http://www.lewrockwell.com/englund/englund25.html Diminishing Property Rights Will Lead to a Higher Rate of Mortgage Defaults.]" June 28 <!-- predicts massive mortgage defaults followed by bailouts -->
 
Englund, Eric. 2005C. "[http://www.lewrockwell.com/englund/englund27.html When the Housing Bubble Bursts, Will President Bush Practice Mugabenomics?]" July, 19 <!-- with what must have been poetic license, predicts also that Paul Krugman will call for more "creative destruction" -->
 
Englund, Eric. 2005D. "[http://www.lewrockwell.com/englund/englund30.html When Will America's Housing Bubble Burst?]" November 4 <!-- labor and material shortages, price inflation; specific timeframe for the bust! -->
 
Englund, Eric. 2006. "[http://www.lewrockwell.com/englund/englund34.html The Federal Reserve and Housing: A Cluster of Errors?]" April 22 <!-- human mistakes and what will be the consequences -->
 
Englund, Eric. 2007. "[http://www.lewrockwell.com/englund/englund41.html From Prime to Subprime, America's Home-Mortgage Meltdown Has Just Begun.]" September 24 <!-- financial situation of the lenders -->
 
Englund, Eric. 2008. "[http://www.lewrockwell.com/englund/englund43.html Countrywide Financial Corporation and the Failure of Mortgage Socialism.]" January 28 <!-- the Countrywide collapse -->
 
French, Doug. 2005. "[http://mises.org/daily/4403 Condo-mania.]" July 11 <!-- mania in Vegas; "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust." -->
 
Grant, James. 2001. "[http://www.nytimes.com/2001/09/09/opinion/09GRAN.html?ex=1001147153&ei=1&en=898b/8611aaca6946 Sometimes the Economy Needs a Setback.]" New York Times. September 9 <!-- basically sums up the dot-com bubble - any particular prediction here? -->
 
Karlsson, Stefan. 2004. "[http://mises.org/daily/1670 America's Unsustainable Boom.]" November 8 <!-- the next crisis more serious than the last one; actually, it is postponed -->
 
Mayer, Chris. 2003. "[http://mises.org/freemarket_detail.aspx?control=450&sortorder=articledate The Housing Bubble.]" The Free Market. Volume 23, Number 8 August <!-- about housing bubbles bursting in general -->
 
Murphy, Robert P. 2007 "[http://blog.mises.org/7590/the-feds-role-in-the-housing-bubble/ The Fed’s Role in the Housing Bubble.]" December 28 <!-- nice cause-and-effect demonstration, but no prediction -->
 
Murphy, Robert P. 2008. "[http://mises.org/daily/3203 Did the Fed, or Asian Saving, Cause the Housing Bubble?]" November 19 <!-- summary of the housing bubble, no predictions but links to some -->
 
North, Gary. 2002. "[http://www.garynorth.com/members/login.cfm?hpage=351.cfm How the FED Inflated the Real Estate Bubble by Pushing Down Mortgage Rates: Report As of 2002,]" Reality Check, March 4 <!-- unknown, access restricted by subscription -->
 
North, Gary. 2005. "[http://www.lewrockwell.com/north/north416.html Surreal Estate on the San Andreas Fault.]" November 25, 2005 <!-- about housing bubbles, notes the danger of ARMs -->
 
Paul, Ron, 2002. [http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60 "Testimony to U.S. House of Representatives"], July 16; text of speech in Woods (2009, 16–17):
 
:"Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
 
:"However, despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing." <!-- -->
 
Paul, Ron. 2000. "[http://ronpaulforcongress.com/html/republic.html A Republic, If You Can Keep It]" January 31 <!-- "If one cares about providing the maximum and best housing for the maximum number of people, one must consider a free-market approach in association with a sound non-depreciating currency. We have been operating a public housing program directly opposite to this, and along with steady inflation and government promotion of housing since the 1960s, the housing market has been grossly distorted. We can soon expect a major downward correction in the housing industry, prompted by rising interest rates." -->
 
Polleit, Thorsten. 2006. "[http://mises.org/daily/2111 Sowing the Seeds of the Next Crisis.]" April 25 <!-- crises follow expansions of money supply -->
 
Ptak, Justin. 2003. "[http://www.lewrockwell.com/orig4/ptak3.html Government Employees, Go Home!]" November 12 <!-- "I am tired of an inflated mortgage market sapping funds from original development. I hope and pray we don’t see a crash." Not exactly a prediction. -->
 
Rockwell, Llewellyn H, Jr. 2008. [http://mises.org/resources/3861 The Left, the Right, and the State]. Auburn, AL: The Mises Institute, 2008 <!-- collection of articles from various dates, can't read it all; the only mention of a possible housing bubble seems to be in p.462-463 (article from April 2008) -->
 
Rogers, Jim. 2005. "[http://thehousingbubble.blogspot.com/2005/04/jim-rogers-on-housing-bubble.html Interview with Jim Rogers on the housing bubble.]" April 22 <!-- A short Q&A on some random blog, basically says Jim Rogers says there is a bubble. There should be something better out there! -->
 
Rothbard, Murray N. tba <!-- ??? -->
 
Schiff, Peter. "[http://www.youtube.com/watch?v=9h2x7R8pxUs Peter Schiff predictions]" (video) Undated A. <!-- a 2009 interview about past predictions -->
 
Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video).
Undated B. <!-- Nov 2, 2008, a series of interviews with predictions from 2006-2007 -->
 
Schiff, Peter. "[http://www.youtube.com/watch?v=Z0YTY5TWtmU Peter Schiff was right 2006-2007 - CNBC edition]" (video). Undated C. <!-- Feb 20, 2009, a series of past interviews with predictions -->
 
Schiff, Peter. "[http://www.youtube.com/watch?v=Aq1N70vym1g Peter Schiff Was Right Again ]" (video). Undated D. <!-- Nov 25, 2008, a series of past interviews with predictions  -->
 
Schiff, Peter. 2003A. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes Commentary, March] <!-- points out serious weakness of Fannie and Freddie, "even a minor recession... would send both into bankruptcy" -->
 
Schiff, Peter. 2003B. [http://www.europac.net/commentaries/lies_fed_chairman_tells Commentary, April] <!-- simply mentions the housing bubble -->
 
Schiff, Peter. 2003C. [http://www.europac.net/commentaries/fed_policy_indicates_belief_real_estate_bubble_too_big_burst Commentary, June] <!-- talks more about the other possible end of a housing bubble - a hyperinflation -->
 
Schiff, Peter. 2004A. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages Commentary, May] <!-- ARMs, speculation, houses that can't be sold, coming bailouts -->
 
Schiff, Peter. 2004B. [http://www.europac.net/commentaries/ny_fed_sees_no_evidence_housing_bubble_are_they_blind Commentary, June] <!-- bubble example, what will happen to a typical investor when interest rates rise -->
 
Schiff, Peter. 2005A. [http://www.europac.net/commentaries/still_not_convinced_theres_real_estate_bubble_read Commentary, April] <!-- 'irrational exuberance' of the markets -->
 
Schiff, Peter. 2005B. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think Commentary, July] <!-- the purely speculative nature of many real estate purchases and mortgages, anyone can join, gambling without risk should the prices fall, "...when the trend turns, prices will drop precipitously. Far from holding on to their homes, as even most housing bears suggest, owner/speculators will sell in droves, or worse, simply walk away from their bets, leaving lenders and tax payers to cover their losses." -->
 
Schiff, Peter. 2005C. [http://www.europac.net/commentaries/home_equity_not_savings Commentary, August] <!-- equity is not savings but credit from somebody else; this source of investment can easily evaporate once others withdraw their credit -->
 
Schiff, Peter. 2005D. [http://www.europac.net/commentaries/wall_street_wakes Commentary, October] <!-- a burst of the bubble imminent? -->
 
Schiff, Peter. 2006A. [http://www.europac.net/media/tv_interviews/peter_schiff_january_10_2006_cnbc_morning_call&type=wmv Appearance on CNBC, January] (video) <!-- about the fall of the value of the dollar -->
 
Schiff, Peter. 2006B. [http://www.europac.net/media/lectures_amp_debates/february_2006_peter_schiff_us_bubble_economy Speech to the Money Show Conference, February] (video) <!-- long video, to be checked later -->
 
Schiff, Peter. 2006C. [http://www.europac.net/media/lectures_amp_debates/november_2006_mortgage_bankers_association_speech Speech to the Western Regional Mortgage Bankers Conference in Las Vegas] November (video, [http://www.csaba.se/2009/09/26/peter-schiff-mortgage-bankers-speech-2006-complete-transcript/ transcript]) <!-- long video, to be checked later -->
 
Schiff, Peter. 2007A. [http://books.google.com/books?id=gUbvPPD9QkUC&printsec=frontcover&source=gbs_atb#v=onepage&q&f=false Crash Proof: How to Profit From the Coming Economic Collapse] (1st edition) New York, N.Y.: Wiley, February 2007 <!-- book, to be checked later -->
 
Schiff, Peter. 2007B. [http://www.europac.net/media/tv_interviews/peter_schiff_january_12_2007_fox Appearance on Fox News – January 12] (video) <!-- sparring about whether there is a bubble or not -->
 
Sennholz, Hans F. 2002. "[http://mises.org/daily/1089 The Fed is Culpable.]" November 11 <!-- if a limit is put on stock market speculation: "The credits created by the Fed and the bank credits resting on the Fed funds undoubtedly would have found other uses and created other investment bubbles, such as in real estate, precious metals, or objects of art and collection." -->
 
Shostak, Frank. 2003. "[http://mises.org/daily/1177 Housing Bubble: Myth or Reality?]" March 4 <!-- shows the reality of the housing bubble; basically says it could burst anytime -->


Shostak, Frank. 2005 "[http://mises.org/daily/1882 Is There a Glut of Saving?]" August 4 <!-- a glut of saving didn't cause the bubble, the Fed did - no predictions -->
In '''2002''', [[Robert Blumen]] summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.<ref name="Blumen_Fannie">Blumen, Robert. [http://mises.org/daily/986 "Fannie Mae Distorts Markets"], ''Mises Daily'', June 17, 2002. Referenced 2011-01-10.</ref> [[Sean Corrigan]] pointed to the blooming real estate business among all the bankruptcies, and noted that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners.<ref name="Corrigan_Trouble">Corrigan, Sean. [http://mises.org/daily/994 "The Trouble with Debt"], ''Mises Daily'', July 01, 2002. Referenced 2011-01-10.</ref> Congressman [[Ron Paul]] criticized government involvement in housing, and said that like all artificially created bubbles, the boom in housing prices cannot last forever.<ref name="Paul_Testimony">Paul, Ron. [http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60 "Testimony to U.S. House of Representatives"], July 16, 2002. Referenced 2011-01-10.</ref>


Thornton, Mark. 2004. "Housing: too good to be true." June 4 <!-- -->
In '''2004''', [[Mark Thornton]] wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."<ref name="Thornton_Housing">Thornton, Mark. "[http://mises.org/daily/1533 Housing: too good to be true.]" June 4, 2004. Referenced 2011-01-10.</ref> Later on, he spelled out the consequences for the construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, and a long recession.<ref name="Thornton">Thornton, Mark. [http://mises.org/journals/scholar/Thornton13.pdf "The Economics of Housing Bubbles"], June 2006, p. 27, 29, 31. Referenced 2011-01-10.</ref>


Thornton, Mark. 2009. "The Economics of Housing Bubbles." America’s Housing Crisis: A Case of Government Failure, Benjamin Powell and Randall Holcombe, eds., Transaction Publishers <!-- -->
[[Stefan Karlsson]] wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.<ref name="Karlsson_Unsustainable">Karlsson, Stefan. [http://mises.org/daily/1670 "America's Unsustainable Boom"], ''Mises Daily'', November 8, 2004. Referenced 2011-01-10.</ref>


Thornton, Mark. Undated. <!-- -->
In '''2005''', [[Doug French]] after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.<ref name="French_Condo-mania">French, Doug. [http://mises.org/daily/4403 "Condo-mania."], ''Mises Daily'', July 11, 2005. Referenced 2011-01-10.</ref> [[Gary North]] warned against the danger of ARMs (adjustable rate mortgages).<ref name="North_Surreal">North, Gary. [http://www.lewrockwell.com/north/north416.html "Surreal Estate on the San Andreas Fault."], November 25, 2005. Referenced 2011-01-10.</ref>


Trask, H.A. Scott. 2003. "Reflation in American History." October 31 <!-- -->
Investor [[Peter Schiff]] acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.<ref name="Schiff_Right">Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video). Referenced 2011-01-10.</ref> He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.<ref name="Schiff_Commentary_2003">Schiff, Peter. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes "Fed official admits the emperor has no clothes!"], Commentary, March 10, 2003. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2004">Schiff, Peter. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages."], Commentary, May 7, 2004. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2005">Schiff, Peter. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think "Housing Speculation is More Rampant Than You Think."], Commentary, July 5, 2005. Referenced 2011-01-10.</ref>


Wenzel, Robert. 2004. "Government Isn't God: FDIC Sticks Banks With Bad Loans and Sticks Borrowers With Subprime Junk." July 21 <!-- -->
'''Reference shortlist:'''<br>
<small>Anderson, 2001, 2003, 2007; Armentano, 2004; Beale, 2009; Blumen, 2002, 2004, 2005; Corrigan, 2002; Crovelli, 2006; DeCoster, 2003; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; MacKenzie, 2003; Mayer, 2003; Mueller, 2004; Murphy, 2007, 2008; North, 2002, 2005; Paul, 2000, 2002, 2003; Polleit, 2006; Ptak, 2003; Rockwell, 2002, 2008; Rogers, 2005; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004A, 2004B, 2005A, 2005B, 2005C, 2006, 2007A, 2007B, 2007C, 2007D; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography).</small>


Woods, Thomas E. Jr. 2009. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Washington D.C.: Regnery Publishing <!-- -->
* Anderson, William L. 2001. "[http://mises.org/daily/617 The Party is Over]," February 20
* Anderson, William L. 2003. "[http://mises.org/daily/1265 Recovery or Boomlet?]" July 07
* Anderson, William L. 2007. "[http://mises.org/daily/2675 The Party is Over – Again]," August 30
* Armentano, Dominick. 2004. "[http://www.cato.org/pub_display.php?pub_id=2510 Memo to Federal Reserve: Increase Interest Rates Now!]"
* Beale, Theodore. 2009. "[http://superstore.wnd.com/books/WND-Books/The-Return-of-the-Great-Depression-Autographed-Hardcover The Return of the Great Depression]"
* Blumen, Robert. 2002. "[http://mises.org/daily/986 Fannie Mae Distorts Markets.]" Mises Daily, June 17
* Blumen, Robert. 2004. "[http://www.lewrockwell.com/orig3/blumen4.html All Real Estate, All the Time]". March 8
* Blumen, Robert. 2005. "[http://blog.mises.org/3566/housing-bubble-are-we-there-yet/ Housing Bubble: Are We There Yet?]" May 8
* Corrigan, Sean. 2002. "[http://mises.org/daily/994 The Trouble with Debt]". July 01
* Crovelli, Mark R. 2006. "[http://www.kitco.com/ind/crovelli/may312006.html Gold, Inflation, And... Austria?]" May 31
* De Coster, Karen. 2003. "[http://karendecoster.com/the-house-that-greenspan-built-irrationally-exuberant-wall-street-welfare-parasites-and-their-fed-god.html The House that Greenspan Built: Irrationally Exuberant Wall Street Welfare Parasites and Their Fed-God.]" September 12
* Duffy, Kevin. 2005A "[http://www.lewrockwell.com/orig5/duffy2.html The Super Bowl Indicator,]" February 5
* Duffy, Kevin. 2005B. "[http://www.lewrockwell.com/orig5/duffy3.html Honey, I Shrunk the Net Worth]," March 3
* Duffy, Kevin. 2005C. "[http://www.lewrockwell.com/orig5/duffy4.html Alan, We Have a Problem,]" August 2
* Duffy, Kevin. 2005D. "[http://www.lewrockwell.com/orig5/duffy5.html Panic Now and Beat the Rush,]" September 24
* Duffy, Kevin. 2006. "[http://www.lewrockwell.com/orig5/duffy8.html Are Mortgage Borrowers Rational?]" June 24
* Duffy, Kevin. 2007A. "[http://www.lewrockwell.com/duffy/duffy10.html It’s a Mad, Mad, Mad, Mad World,]" May 22
* Duffy, Kevin. 2007B. "[http://www.bearingasset.com/media/media_barrons_20070618.pdf For Whom Do the Bells Toll?]" Barron’s, June 18
* Duffy, Kevin. 2007C. "[http://www.lewrockwell.com/duffy/duffy11.html Financial Markets on Crack,]" August 22
* Duffy, Kevin. 2007D. "[http://www.lewrockwell.com/duffy/duffy12.html Mr. Mozilo Goes to Washington,]" September 15
* Economics of contempt. 2008. "[http://economicsofcontempt.blogspot.com/2008/07/official-list-of-punditsexperts-who.html The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble.]" July 16
* Englund, Eric. 2004. "[http://www.lewrockwell.com/englund/englund13.html Monetizing Envy and America’s Housing Bubble]". July 19
* Englund, Eric. 2005A. "[http://www.lewrockwell.com/englund/englund24.html Houses Are Consumer Durables, Not Investments,]" June 8
* Englund, Eric. 2005B. "[http://www.lewrockwell.com/englund/englund25.html Diminishing Property Rights Will Lead to a Higher Rate of Mortgage Defaults.]" June 28
* Englund, Eric. 2005C. "[http://www.lewrockwell.com/englund/englund27.html When the Housing Bubble Bursts, Will President Bush Practice Mugabenomics?]" July, 19
* Englund, Eric. 2005D. "[http://www.lewrockwell.com/englund/englund30.html When Will America's Housing Bubble Burst?]" November 4
* Englund, Eric. 2006. "[http://www.lewrockwell.com/englund/englund34.html The Federal Reserve and Housing: A Cluster of Errors?]" April 22
* Englund, Eric. 2007. "[http://www.lewrockwell.com/englund/englund41.html From Prime to Subprime, America's Home-Mortgage Meltdown Has Just Begun.]" September 24
* Englund, Eric. 2008. "[http://www.lewrockwell.com/englund/englund43.html Countrywide Financial Corporation and the Failure of Mortgage Socialism.]" January 28
* French, Doug. 2005. "[http://mises.org/daily/4403 Condo-mania.]" July 11
* Grant, James. 2001. "[http://www.nytimes.com/2001/09/09/opinion/09GRAN.html?ex=1001147153&ei=1&en=898b/8611aaca6946 Sometimes the Economy Needs a Setback.]" New York Times. September 9
* Karlsson, Stefan. 2004. "[http://mises.org/daily/1670 America's Unsustainable Boom.]" November 8
* MacKenzie, D.W. 2003. "[http://mises.org/daily/1337/Doubts-about-Recovery Doubts about Recovery]" October 08
* Mayer, Chris. 2003. "[http://mises.org/freemarket_detail.aspx?control=450&sortorder=articledate The Housing Bubble.]" The Free Market. Volume 23, Number 8 August
* Mueller, Antony P. 2004. "[http://mises.org/daily/1627 Mr Bailout]", September 30
* Murphy, Robert P. 2007 "[http://blog.mises.org/7590/the-feds-role-in-the-housing-bubble/ The Fed’s Role in the Housing Bubble.]" December 28
* Murphy, Robert P. 2008. "[http://mises.org/daily/3203 Did the Fed, or Asian Saving, Cause the Housing Bubble?]" November 19
* North, Gary. 2002. "[http://www.garynorth.com/members/login.cfm?hpage=351.cfm How the FED Inflated the Real Estate Bubble by Pushing Down Mortgage Rates: Report As of 2002,]" Reality Check, March 4
* North, Gary. 2005. "[http://www.lewrockwell.com/north/north416.html Surreal Estate on the San Andreas Fault.]" November 25, 2005
* Paul, Ron. 2000. "[http://ronpaulforcongress.com/html/republic.html A Republic, If You Can Keep It]" January 31
* Paul, Ron, 2002. [http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60 "Testimony to U.S. House of Representatives"], July 16
* Paul, Ron, 2003. [http://paul.house.gov/index.php?option=com_content&task=view&id=258&Itemid=60 "Testimony to U.S. House Financial Services Committee"], September 10
* Polleit, Thorsten. 2006. "[http://mises.org/daily/2111 Sowing the Seeds of the Next Crisis.]" April 25
* Ptak, Justin. 2003. "[http://www.lewrockwell.com/orig4/ptak3.html Government Employees, Go Home!]" November 12
* Rockwell, Llewellyn H, Jr. 2002. "[http://mises.org/daily/929 The Marvel That Is Capitalism]" April 08
* Rockwell, Llewellyn H, Jr. 2008. [http://mises.org/resources/3861 The Left, the Right, and the State]. Auburn, AL: The Mises Institute, 2008
* Rogers, Jim. 2005. "[http://thehousingbubble.blogspot.com/2005/04/jim-rogers-on-housing-bubble.html Interview with Jim Rogers on the housing bubble.]" April 22
* Schiff, Peter. "[http://www.youtube.com/watch?v=9h2x7R8pxUs Peter Schiff predictions]" (video) Undated A.
* Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video). Undated B.
* Schiff, Peter. "[http://www.youtube.com/watch?v=Z0YTY5TWtmU Peter Schiff was right 2006-2007 - CNBC edition]" (video). Undated C.
* Schiff, Peter. "[http://www.youtube.com/watch?v=Aq1N70vym1g Peter Schiff Was Right Again ]" (video). Undated D.
* Schiff, Peter. 2003A. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes Commentary, March]
* Schiff, Peter. 2003B. [http://www.europac.net/commentaries/lies_fed_chairman_tells Commentary, April]
* Schiff, Peter. 2003C. [http://www.europac.net/commentaries/fed_policy_indicates_belief_real_estate_bubble_too_big_burst Commentary, June]
* Schiff, Peter. 2004A. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages Commentary, May]
* Schiff, Peter. 2004B. [http://www.europac.net/commentaries/ny_fed_sees_no_evidence_housing_bubble_are_they_blind Commentary, June]
* Schiff, Peter. 2005A. [http://www.europac.net/commentaries/still_not_convinced_theres_real_estate_bubble_read Commentary, April]
* Schiff, Peter. 2005B. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think Commentary, July]
* Schiff, Peter. 2005C. [http://www.europac.net/commentaries/home_equity_not_savings Commentary, August]
* Schiff, Peter. 2005D. [http://www.europac.net/commentaries/wall_street_wakes Commentary, October]
* Schiff, Peter. 2006A. [http://www.europac.net/media/tv_interviews/peter_schiff_january_10_2006_cnbc_morning_call&type=wmv Appearance on CNBC, January] (video)
* Schiff, Peter. 2006B. [http://www.europac.net/media/lectures_amp_debates/february_2006_peter_schiff_us_bubble_economy Speech to the Money Show Conference, February] (video)
* Schiff, Peter. 2006C. [http://www.europac.net/media/lectures_amp_debates/november_2006_mortgage_bankers_association_speech Speech to the Western Regional Mortgage Bankers Conference in Las Vegas] November (video, [http://www.csaba.se/2009/09/26/peter-schiff-mortgage-bankers-speech-2006-complete-transcript/ transcript])
* Schiff, Peter. 2007A. [http://books.google.com/books?id=gUbvPPD9QkUC&printsec=frontcover&source=gbs_atb#v=onepage&q&f=false Crash Proof: How to Profit From the Coming Economic Collapse] (1st edition) New York, N.Y.: Wiley, February 2007
* Schiff, Peter. 2007B. [http://www.europac.net/media/tv_interviews/peter_schiff_january_12_2007_fox Appearance on Fox News – January 12] (video)
* Sennholz, Hans F. 2002. "[http://mises.org/daily/1089 The Fed is Culpable.]" November 11
* Shostak, Frank. 2003. "[http://mises.org/daily/1177 Housing Bubble: Myth or Reality?]" March 4
* Shostak, Frank. 2005 "[http://mises.org/daily/1882 Is There a Glut of Saving?]" August 4
* Thornton, Mark. 2004A. "[http://www.lewrockwell.com/thornton/thornton11.html 'Bull' Market?]" February 9.
* Thornton, Mark. 2004B. "[http://mises.org/daily/1533 Housing: too good to be true.]" June 4
* Thornton, Mark. 2004C. "[http://www.lewrockwell.com/thornton/thornton18.html A Bull Market in Gold — Technically Speaking]", March.
* Thornton, Mark. 2005A. "[http://www.lewrockwell.com/thornton/thornton27.html Is the Housing Bubble Popping?]" , August.
* Thornton, Mark. 2005B. "[http://www.lewrockwell.com/thornton/thornton29.html The Price of Gold: How High Can it Go?]", August.
* Thornton, Mark. 2006. "[http://mises.org/journals/scholar/Thornton13.pdf The Economics of Housing Bubbles.]", June
* Thornton, Mark. 2007A. "[http://www.lewrockwell.com/thornton/thornton33.html "We Told You So"], March.
* Thornton, Mark. 2007B. "[http://www.lewrockwell.com/thornton/thornton32.html Illegal Immigrants and the Housing Bubble]", March.
* Thornton, Mark. 2007C. "[http://blog.mises.org/6948/new-record-skyscraper-and-depression-in-the-making/ New Record Skyscraper (and depression?) in the making]", August
* Thornton, Mark. 2007D. "[http://www.lewrockwell.com/thornton/thornton38.html You Heard It Here First]", August
* Trask, H.A. Scott. 2003. "[http://mises.org/daily/1363 Reflation in American History.]" October 31
* Wenzel, Robert. 2004. "[http://www.economicpolicyjournal.com/2008/07/government-isnt-god-fdic-sticks-banks.html Government Isn't God: FDIC Sticks Banks With Bad Loans and Sticks Borrowers With Subprime Junk.]"
* Woods, Thomas E. Jr. 2009. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Washington D.C.: Regnery Publishing


<ref name="Block_Thymologists" />
==Other predictions==
* The [[Skyscraper index]] shows a correlation between the construction of the world's tallest buildings and impending financial crises. While not developed by Austrian economists, it is compatible with their views about the [[business cycle]].<ref name="Thornton_Skyscrapers">Mark Thornton. [http://mises.org/daily/3038 "Skyscrapers and Business Cycles"], ''Mises Daily'', August 23, 2008. Originally appeared in the ''Quarterly Journal of Austrian Economics'' vol. 8, no. 1 (Spring 2005) - [http://mises.org/journals/qjae/pdf/qjae8_1_4.pdf PDF]. There is also an [http://media.mises.org/mp3/audioarticles/3038_Thornton.mp3 MP3] audio file read by the author. Referenced 2011-12-13.</ref>


==References==
==References==
Line 178: Line 173:


==Links==
==Links==
* [http://economicsofcontempt.blogspot.com/2008/07/official-list-of-punditsexperts-who.html The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble] by "Economics of Contempt", July 2008
* [http://www.youtube.com/watch?v=6XbG6aIUlog Keynesian Predictions vs. American History | Thomas E. Woods, Jr.] (video), January 2010 <!-- mention of Benjamin Anderson's prediction; from 17:30 wrong predictions of Soviet Union's success; the "end of recessions" as a signal of trouble; stagflation; Krugman; but few mentions of successful predictions -->
* [http://mises.org/daily/4177 The Federal Reserve as a Confidence Game: What They Were Saying in 2007] by Mark Thornton, March 2010
* [http://www.youtube.com/watch?v=HegiGuJlzTQ The Austrian School on Business Cycles: 100 Years of Being Right] (video) by Mark Thornton, March 2010


[[Category:Austrian School of Economics]]
[[Category:Austrian School of Economics]]
{{Stub}}
{{Stub}}

Latest revision as of 18:12, 12 May 2013

This page attempts to list various predictions made by Austrian economists about important economic and other developments.

Important note: Austrian economists, as Austrian economists, or praxeologists, do not predict. They can predict not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians. In praxeology, A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the "A will necessarily lead to B" type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety.

With this in mind, it is interesting that Austrian economists have been quite successful at predicting major events.[1]

The Great Depression

The Great Depression was predicted by several Austrian economists:

  • In Austria, economist Ludwig von Mises saw the problem developing in its early stages and predicted to his colleagues in 1924 that the large Austrian bank, Creditanstalt, would eventually crash. He wrote a full analysis of Irving Fisher’s monetary views, published in 1928, where he targeted Fisher’s reliance on price indexes as a key vulnerability that would bring about the Great Depression, concluding: "because of the imperfection of the index number, these calculations would necessarily lead in time to errors of very considerable proportions."[2]
  • F. A. Hayek published several articles in early 1929 in which he predicted the collapse of the American boom.[citation needed] Felix Somary, who like Mises was a student at the University of Vienna, issued several dire warnings in the late 1920s.[citation needed][3]
  • In America economists Benjamin Anderson and E.C. Harwood also warned that the Federal Reserve policies would cause a crisis, and like Somary, they were largely ignored.[3] Albert H. Wiggin summed up in 1931 that the "depression has been prolonged and not alleviated by delay in making necessary readjustments."[4]

Post-WWII recovery

In the 1945 symposium Financing American Prosperity, several prominent economists discussed the financial and other economic problems of the transition after World War II and suggested solutions. With the exception of Benjamin Anderson, who called for "drastic economies in the postwar period" and insisted that "proposals for expanding federal expenditures after the war must be fought all along the line", the contributors all advocated a scope of federal expenditures much larger than that before the war.[5]

The "Depression of 1946" may be one of the most widely predicted events that never happened in American history. As the war was winding down, leading Keynesian economists of the day argued, as Alvin Hansen did, that "the government cannot just disband the Army, close down munitions factories, stop building ships, and remove all economic controls." After all, the belief was that the only thing that finally ended the Great Depression of the 1930s was the dramatic increase in government involvement in the economy. However, the government canceled war contracts, and its spending fell from $84 billion in 1945 to under $30 billion in 1946. By 1947, the government was paying back its massive wartime debts by running a budget surplus of close to 6 percent of GDP. The military released around 10 million Americans back into civilian life. Most economic controls were lifted, and all were gone less than a year after V-J Day. In short, the economy underwent what the historian Jack Stokes Ballard referred to as the "shock of peace."

If the wartime government stimulus had ended the Great Depression, its winding down would certainly lead to its return. At least that was the consensus of almost every economic forecaster, government and private. In August 1945, the Office of War Mobilization and Reconversion forecast that 8 million would be unemployed by the spring of 1946, which would have amounted to a 12 percent unemployment rate. In September 1945, Business Week predicted unemployment would peak at 9 million, or around 14 percent. Leo Cherne of the Research Institute of America and Boris Shishkin, an economist for the American Federation of Labor, forecast 19 and 20 million unemployed respectively — rates that would have been in excess of 35 percent!

After the Second World War, unemployment rates, artificially low because of wartime conscription, rose a bit, but remained under 4.5 percent in the first three postwar years — below the long-run average rate of unemployment during the 20th century. Some workers voluntarily withdrew from the labor force, choosing to go to school or return to prewar duties as housewives. But, many who lost government-supported jobs in the military or in munitions plants found employment as civilian industries expanded production—in fact civilian employment grew, on net, by over 4 million between 1945 and 1947. Household consumption, business investment, and net exports all boomed as government spending receded.[6]

End of the Bretton Woods system

The collapse of the Bretton Woods System and the following rise of the gold price has been predicted by several Austrian economists and is covered in the following:

Savings and loan crisis

In his 1982 introduction to America's Great Depression, Murray Rothbard predicted the Savings and loan crisis and hinted at trouble in the stock market:

"... The fact that Reaganomics cannot bring down interest rates for long puts a permanent brake on the stock market, which has been in chronic trouble since the mid-1960s and is increasingly in shaky shape. The bond market is already on the way to collapse. The housing market has at last been stopped short by the high mortgage rates, and the same has happened to many collectibles. Unemployment is chronically higher each decade, and is now at the highest since the Great Depression, with no sign of improvement. The accelerating inflationary boom of the three decades since the end of World War II has loaded the economy with unsound investments and with an oppressive mountain of debt: consumer, homeowner, business, and international. In recent decades, business has in effect relied on inflation to liquidate the debt, but if "disinflation" (the lessening of inflation in 1981 and at least the first half of 1982) is to continue, what will happen to the debt? Increasingly, the answer will be bankruptcies, and deeper depression. The bankruptcy rate is already the highest since the Great Depression of the 1930s. Thrift institutions caught between high interest rates to their depositors and low rates earned on long-time mortgages, will increasingly become bankrupt or be forced into quasi-bankrupt mergers with other thrifts which will be dragged down by the new burdens. Even commercial banks, protected by the safety blanket of the FDIC for half a century, are now beginning to go down the drain, dragged down by their unsound loans of the past decade."

Dot-com bubble

Main article: Austrian predictions/Dot-com bubble

The Dot-com bubble and its bust was foreseen by several Austrian economists.[7] In October, 1999, Sean Corrigan pointed out a massive bubble and implied it will burst. He compared the conditions to those during the late summer of 1987, the Japanese bubble of the late 1980s, and the "roaring Twenties" in the United States. [8] In March, 2000, Christopher Mayer noted that all the ingredients of a bubble - fundamental (i.e., a technological revolution), financial (i.e., a surge in money and credit) and psychological (i.e., a suspension of belief in traditional valuation measures) - appear to exist in the current bull market and predicted it will end with a bust.[9] In August, 2000, William Anderson pointed to the bubble in the high-technology sector, mentioned the negative consequences of a regulatory attack at Microsoft[10] (which was analyzed a year earlier by Thomas DiLorenzo[11]). There were others.

Reference shortlist:
Anderson, 2000; Corrigan, 1999; Deden, 1999; DiLorenzo, 1999; Grant, 1996A, 1996B; Hülsmann, 2000; Mayer, 2000; Paul, 2000; Reisman, 1999; Sennholz, 2000; Shostak, 1999; Thornton, 2000.

Housing bubble

Main article: Austrian predictions/Housing bubble

During and after the burst of the Dot-com bubble, numerous economists predicted the 2000s housing bubble that culminated in the Great Recession from 2008 onward.

In 2002, Robert Blumen summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.[12] Sean Corrigan pointed to the blooming real estate business among all the bankruptcies, and noted that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners.[13] Congressman Ron Paul criticized government involvement in housing, and said that like all artificially created bubbles, the boom in housing prices cannot last forever.[14]

In 2004, Mark Thornton wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."[15] Later on, he spelled out the consequences for the construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, and a long recession.[16]

Stefan Karlsson wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.[17]

In 2005, Doug French after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.[18] Gary North warned against the danger of ARMs (adjustable rate mortgages).[19]

Investor Peter Schiff acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.[20] He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.[21][22][23]

Reference shortlist:
Anderson, 2001, 2003, 2007; Armentano, 2004; Beale, 2009; Blumen, 2002, 2004, 2005; Corrigan, 2002; Crovelli, 2006; DeCoster, 2003; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; MacKenzie, 2003; Mayer, 2003; Mueller, 2004; Murphy, 2007, 2008; North, 2002, 2005; Paul, 2000, 2002, 2003; Polleit, 2006; Ptak, 2003; Rockwell, 2002, 2008; Rogers, 2005; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004A, 2004B, 2005A, 2005B, 2005C, 2006, 2007A, 2007B, 2007C, 2007D; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography).

Other predictions

  • The Skyscraper index shows a correlation between the construction of the world's tallest buildings and impending financial crises. While not developed by Austrian economists, it is compatible with their views about the business cycle.[24]

References

  1. ↑ Walter Block. Austrian Thymologists Who Predicted the Housing Bubble, LRC.com, December 22, 2010. Referenced 2011-11-29.
  2. ↑ Ludwig von Mises. "The Causes of the Economic Crisis, and Other Essays Before and After the Great Depression", collection of works reposted from 1923 and 1928. Referenced 2011-01-12.
  3. ↑ 3.0 3.1 Mark Thornton. "Mises vs. Fisher on Money, Method, and Prediction: The Case of the Great Depression" (pdf), p.13-15; December 2006. Referenced 2011-12-13.
  4. ↑ Murray N. Rothbard. America's Great Depression, Chapter 9, referenced 2011-01-11.
  5. ↑ Contributors: Benjamin M. Anderson, John Maurice Clark, Howard S. Ellis, Alvin H. Hansen, Sumner H. Slichter and John H. Williams. Editors: Paul T. Homan, Fritz Machlup. Financing American Prosperity, A Symposium of Economists. The Twentieth Century Fund, first published October 1945. Referenced 2012-05-04.
  6. ↑ Jason E. Taylor and Richard K. Vedder. "Stimulus by Spending Cuts: Lessons from 1946" (pdf), Cato Policy Report, May/June 2010, Vol. XXXII No.3, referenced 2012-05-04.
  7. ↑ Mark Thornton. "Who Predicted the Bubble? Who Predicted the Crash?" (pdf), The Independent Review, v. IX, n. 1, Summer 2004, ISSN 1086-1653, Copyright © 2004, pp. 5–30. Referenced 2011-12-13.
  8. ↑ Sean Corrigan. "Will the Bubble Pop?", Mises Daily, October 18, 1999. Referenced 2012-01-08.
  9. ↑ Christopher Mayer. "The Meaning of 'Over-Valued'", Mises Daily, March 30, 2000. Referenced 2011-12-13.
  10. ↑ William L. Anderson. "New Economy, Old Delusion", The Free market, August 2000, Volume 18, Number 8. Referenced 2012-01-08.
  11. ↑ DiLorenzo, Thomas J. "Regulatory Sneak Attack.", Mises Daily, September 16, 1999. Referenced 2012-01-08.
  12. ↑ Blumen, Robert. "Fannie Mae Distorts Markets", Mises Daily, June 17, 2002. Referenced 2011-01-10.
  13. ↑ Corrigan, Sean. "The Trouble with Debt", Mises Daily, July 01, 2002. Referenced 2011-01-10.
  14. ↑ Paul, Ron. "Testimony to U.S. House of Representatives", July 16, 2002. Referenced 2011-01-10.
  15. ↑ Thornton, Mark. "Housing: too good to be true." June 4, 2004. Referenced 2011-01-10.
  16. ↑ Thornton, Mark. "The Economics of Housing Bubbles", June 2006, p. 27, 29, 31. Referenced 2011-01-10.
  17. ↑ Karlsson, Stefan. "America's Unsustainable Boom", Mises Daily, November 8, 2004. Referenced 2011-01-10.
  18. ↑ French, Doug. "Condo-mania.", Mises Daily, July 11, 2005. Referenced 2011-01-10.
  19. ↑ North, Gary. "Surreal Estate on the San Andreas Fault.", November 25, 2005. Referenced 2011-01-10.
  20. ↑ Schiff, Peter. "Peter Schiff Was Right" (video). Referenced 2011-01-10.
  21. ↑ Schiff, Peter. "Fed official admits the emperor has no clothes!", Commentary, March 10, 2003. Referenced 2011-01-10.
  22. ↑ Schiff, Peter. "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages.", Commentary, May 7, 2004. Referenced 2011-01-10.
  23. ↑ Schiff, Peter. "Housing Speculation is More Rampant Than You Think.", Commentary, July 5, 2005. Referenced 2011-01-10.
  24. ↑ Mark Thornton. "Skyscrapers and Business Cycles", Mises Daily, August 23, 2008. Originally appeared in the Quarterly Journal of Austrian Economics vol. 8, no. 1 (Spring 2005) - PDF. There is also an MP3 audio file read by the author. Referenced 2011-12-13.

Links

Retrieved from "https://wiki.freecapitalists.org/index.php?title=Austrian_predictions&oldid=18453"