November 2014

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I don't think it's correct to say that the majority position is the majority for one thing - I think both the positions you describe are minority positions and the majority position is much murkier, ill-defined, and not based on much economics at all.

But I also think it's a mistake to say that what you term the majority position isn't in agreement on the power of the pricing system to guide the recalculation process. So far as I know, none of us have denied that point. The analytic difference, it seems to me, is whether the market guarantees full employment and whether collective action through other institutions can achieve full employment or something like it with minimal costs.

But if you approach the difference as if people are rejecting the power of the price system to coordinate economic activity I think you're going to leave a lot of people scratching their heads.

Hayek advocated pre-announced total income stream targeting by the central bank if the bust phase of the trade cycle involves a vicious crashing cycle in the shadow money and banking system, in which recalculation takes the economy every further away from a wealth producing coordination equilibrium.

Money and credit are a loose going in the coordination and recalculation system, and when they are carooming every further out of joint, in a central banking system the job of the central bank is to set expectation leading to greater coordination rather than less.

Loose JOINT

the correct German word it has been pointed out is: *Auflockerung" --- which if I have this right translates to "freeing up" or"loosening up" the market economy.

If this controversy been "resolved" by most of the economics profession today in favor of some version of the aggregate demand view, what does that say about economics as a science? If the majority is wrong (as Austrians believe) -- after all of these years of discussion -- where is the science? Are we using the word "science" just to impress people?

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