Austrians vs. Market Monetarists on the Housing Bubble

“”We Austrian economists frequently cross swords with our Keynesian foes on all manner of economic analysis and government policy recommendations. Yet the standard Austrian analysis of the business cycle is also sharply at odds with that of the “Market Monetarists,” a new school of thought coming out of the Chicago school tradition and now gaining traction at places like the Mercatus Center. In particular, prominent Market Monetarists have challenged the Austrian narrative of the housing bubble, arguing that the claims of “malinvestment” and the need for reallocation of resources do not fit the data. Yet as we’ll see, it’s the Market Monetarists who are defying common sense with their alternate version of history.”

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