Austrian School Of Economics

Well, if you go back to previous periods in history, in the early Twenties, for instance, America had an economic problem, and believe it or not they raised interest rates, they balanced the budget. They had a terrible year or two in the early Twenties, but then they had one of the most prosperous and exciting economic decades in history, in American history. The Scandinavians, in the early Nineties, had the same problem. They let people go bankrupt, they let the market take its course – that was a horrible pain for a couple of years, but then Scandinavia became one of the most prosperous parts of the world economy, over the next 10 – 15 years, so that solution works. The Japanese, at the same time in the early Nineties, did the opposite. They refused to let people go bankrupt. They spent staggering amounts of money they didn't have. They printed a lot of money, and the Japanese still talk about the 1990s as a lost decade; now they talk about two lost decades. That has not worked – that system of, the tangient system, if you will, has not worked any time in history. Hayek has worked. It's difficult for a while, but in the end you clean out the system. Many people, not just Hayek – but von Mises, Schumpeter – many economists throughout history have said, unless you clean out the system, anything after that is artificial, any recovery is artificial and it won't last. So far, they've been proved right, and Keynes has not been proved right.