NYT today reports that "American's Savings Rate at Lowest Level Since 1933." In fact, the savings rate dipped into negative territory --- minus .5 percent. Meaning that Amercian's spent more than they earned in after tax income in 2005.
An earlier post raised some concerns over the long term viability of the US economy given the policy path that has been followed by the executive branches of the last several administrations and also Fed policy --- which I would argue has been more inflationary than usually thought.
One of the most important contributions that the Austrian school made to 20th century economics was the development of the monetary theory of the trade cycle, and yet in the modern era the Austrian school has not devoted the intellectual attention to these issues and to making the modifications and advancements on existing theory required to bring the Austrian theory of the trade cycle into the modern conversation among economists. Obviously, Roger Garrison, Steve Horwitz, Joe Salerno, Roger Koppl, and Bill Butos have all said very important things on the theory and empirics of the Austrian theory of the trade cycle. And Tyler Cowen and Richard Wagner have made cogent criticisms of the theory. But in terms of modern application to the policy world we must address today, the Austrian economists have not taken up the challenge to write beyond policy-wonk papers or op-eds, and instead offer an analysis that would engage the crowd at Brookings or NBER. But this is what is sorely needed in my opinion.
There is a unique opportunity with the changing of the guard at the Fed, and the increasing awareness of the 'fault lines' in the modern US economy that are a result of fiscal irresponsibility and monetary expansion under the current governmental regime.
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