Austrians Profiting by Keynes

F L Light's picture
Submitted by F L Light on Wed, 2012-03-28 13:08

The principals at assert that one must respect the influence of Keynes on the market and not try to strive against it to one's detriment.
This is the beginning of an essay there by Jack Sparrow, "Keynesian Psychology With Austrian Tails:"

"The following is a “thinking out loud” piece that more or less details why I no longer consider myself a devotee of Austrian economics. I have certainly not “gone Keynesian” by any means… but as determined with political labels long ago (dems vs repubs etc), I have now come to the conclusion that allegiance to any economic ideology is just as toxic (from a trading perspective) as allegiance to a political one.

For as long as I have been a trader, I have considered myself a devotee of Austrian economics. This goes back to my earliest days of market involvement in the mid-1990s (and my immediate taste for the macro side).

Some of my first strong influences were Jim Rogers (whose views are still widely dispersed today), Doug Casey, and Victor Sperandeo, who explained Austrian economics in lucid detail in his excellent book Methods of a Wall Street Master.

In addition to those influences, from the very beginning, most all the legendary global macro traders I came across — with the possible exception of George Soros — expressed themselves as either fiscal conservatives, flat-out Austrians, or some combination of the two.

There is a longstanding conversational thread and respected body of thought that subtly (or perhaps not so subtly) argues that the Austrian view — Hayek, Von Mises et al — represents reality, whereas Keynesian economics represents government-sponsored fantasy.

I still believe the charges are more or less true. Keynesian economics IS unsustainable fantasy. It DOES always end in tears. And Austrian economists were more or less CORRECT in envisioning the inevitable outcome of unchecked Keynesian activity (i.e. the global financial crisis as played out in 2008)."