The Austrian Perspective on Recoveries, Bubbles, and Monetary Policy

Published on
July 16th, 2020
58 minutes

The Austrian Perspective on Recoveries, Bubbles, and Monetary Policy

The Interview ·
Featuring Robert Murphy

Published on: July 16th, 2020 • Duration: 58 minutes

For decades, the schools of economic thought that have informed monetary and fiscal policy decisions have been decidedly not Austrian; but, outside of the echo chambers of Washington D.C., Austrian School economics is in a boom as academics and civilians alike see the predictions and promises of the mainstream fall short. Guided by his Austrian views, Robert P. Murphy, senior fellow at the Mises Institute, has been astute with many of his predictions of the side effects of mainstream economic policies. Together with Real Vision's Ed Harrison, Murphy reintroduces the core of Austrian economics and compares and contrasts with other major economic schools of thought in relation to how each try to make sense of past and recent economic developments and the responses to them. He also attempts to answer the question of whether the Fed's monetary bazooka has ushered in a swift end to the recent business cycle and set us on course for another underwhelming economic expansion. Filmed on July 14, 2020.



  • DO
    DIOGO O.
    17 July 2020 @ 11:07
    Regarding the subject of Economics, some points must be highlighted, in my opinion: 1) Austrian Economics (i study it ever since 2009) has many interesting and relevant points. However, it is UNCOMPLETE! Without Prof. Richard Werner's Disagreggation of Credit points, one CANNOT fully comprehend the businesse cycle. For God's sake, the Austrians always talk about the excess credit generated by artificially low interest rates, BUT THEY NEVER TOUCH ON THE STRUCTURE OF THE CREDIT, which mean, FOR WHAT PORPOSE IS THE CREDIT BEEN USED FOR: productive investment, consumption or speculation. Without that discussion, the Austrians will REMAIN incomplete, as has been ever since Von Misses....and will remain on the sideline of economic history. 2) The Austrian view on MONEY is also incomplete. They NEED to study Prof. Richard Werner urgently. And, their hiding of the deleterious effects of the Gold Standard (they only point out its benefits) is MISLEADING and PERVERSE. Great Interview anyhow! Keep up the good work guys!
    • EJ
      Eric J.
      20 July 2020 @ 21:04
      Interesting points. The fact that I don't quite understand them in full makes me want to see his suggestions come about!
    • GB
      Gold B.
      29 July 2020 @ 17:05
      I find it amazing how people can claim to have studied Austrian Economics without apparently having read a single book of Murray Rothbard who finished and completed the theories of Mises and the others. Rothbard talks about everything Werner talks about (including money and credit ) loooong before that guy published his first book on the subject. Werner is a good guy and good analyst of the more modern structures of the credit system (Rothbard unfortunately died too early) but Werner certainly did not invent these money and credit theories. So please, stay factual and try reading a bit more
  • AZ
    Alexander Z.
    25 July 2020 @ 19:18
    Austrian Economist Rahim Taghizadegan would be a great guest
  • MR
    Michael R.
    17 July 2020 @ 02:28
    Such a clear and understandable contrast to the "MMT Circus" interview last week. This is the beauty of backing fiat currency with gold, Bitcoin, etc., it helps to keep spending in check. Thank you Ed and Dr. Murphy and RV.
    • AR
      Anthony R.
      23 July 2020 @ 05:57
      Yep. That was precisely THE point to getting off the gold standard: open checkbook for the endless buying of votes for power.....
  • GP
    Gregory P.
    18 July 2020 @ 09:50
    Didn't know that George Castanza was an Austrian economist. Great Stuff!
    • EJ
      Eric J.
      20 July 2020 @ 21:02
      Oh that's harsh!
    • AR
      Anthony R.
      23 July 2020 @ 05:52
      '.....not that there's anything wrong with that......'
  • AR
    Anthony R.
    23 July 2020 @ 05:40
    The political class hates the Austrian School, and refuse to teach it, for very good reason..... It would wake folks up - and that's bad.... Great discussion. Thanks for having him on. For those looking to for a great read during all this extra time some have, pick up Murray Rothbard's 'History of Economic Thought from the Austrian Perspective. Two volumes of history written in a surprisingly engaging manner. Often hilarious. Best of all: no math... lol.
  • JD
    Jeffrey D.
    23 July 2020 @ 02:15
    Best guest yet. That nervous laughter at the end really put a fine point on the whole situation.
  • SW
    Scott W.
    21 July 2020 @ 12:52
    Fantastic job Ed! Thanks for turning that around so quickly!!!
  • EJ
    Eric J.
    20 July 2020 @ 21:01
    Get him on again! I'd also love to see a piece/conversation tracing the history of the economy (and economic crises) through the Austrian lens. Let's get the Jim Grant and Robert Murphy on together!
  • MD
    Matt D.
    19 July 2020 @ 23:44
    Great interview, looking forward to the follow up. Nice compliment to Ed at the end too from a such a knowledgeable guest. Thanks Ed and Robert.
  • JJ
    John J.
    19 July 2020 @ 20:41
    Fabulous. Great job!
  • BP
    Bakulesh P.
    19 July 2020 @ 17:50
    Great interview with so much deep understanding of Keynesian and Austrian Economic Theories to explain the current economic conditions
  • OA
    Oliver A.
    19 July 2020 @ 15:49
    Take a drink every time Ed speak perfect German
  • mB
    marc B.
    18 July 2020 @ 18:05
    I really liked his viewpoints but is the Austrian economy that successful? I like the idea of no boom bust economies because many get hurt who don’t know how to play it. But the ones risk managing bubbles can make a lot. On both sides. Interesting insights regardless and I agree with a lot!
  • MT
    Matthew T.
    17 July 2020 @ 22:14
    Excellent interview. Would love to see Murphy invited back for another interview or two.
  • FL
    Francis L.
    17 July 2020 @ 17:36
    On the next round w/ Robert I'd love to hear more about the differences between how the Austrian school interprets historical economic events vs mainstream economists.
  • RN
    Richard N.
    17 July 2020 @ 15:50
    I would love to have Bob back to hear the Austrians prescriptive policies and mechanisms to solve panics. He eluded to the "do nothing" policy but also said it's not politically palatable. Do they have a more intermediate idea on how policymakers would address the issue? Like Ed said in the interview, we do have a Fed, and politicians have to act to keep their jobs. With those factors in place, what is the best move from the Austrian perspective?
  • WB
    William B.
    17 July 2020 @ 03:18
    The end was the best. The whole interview was great, but the end was, “If the FED didn’t exist. If the FED didn’t exist”..
    • DO
      DIOGO O.
      17 July 2020 @ 11:11
      same effect as : ''...if only we lived on Mars already..'' Come on...
  • TK
    Thomas K.
    17 July 2020 @ 10:35
    Great interview. Get Bob back on again soon.
  • AI
    Andras I.
    17 July 2020 @ 05:04
    There is a growing collection of presentations on the Mises Institute youtube channel: Also interesting is a MMT vs. Austrian discussion between Bob Murphy and Warren Mosler (who was presenting on RV a few times in the subject):
  • NZ
    Nicholas Z.
    17 July 2020 @ 02:43
    Please have Bob back on again at some point! Great conversation. Ed is always great too!
  • RC
    Richard C.
    17 July 2020 @ 02:26
    Excellent content. Ed’s work on RV alone is worth the price of admission. He is consistently able to match his guests note for note, while giving them the space to speak freely. Fantastic work yet again, Ed.
  • RD
    REMCO D.
    17 July 2020 @ 02:12
    Good stuff guys. I love the different views you guys bring on and Ed as always knows how to get the most out of them.
  • JA
    Jordan A.
    17 July 2020 @ 02:01
    More please. I could have listened to this for hours.
  • RM
    Ron M.
    17 July 2020 @ 00:54
    This was great. Have Robert back soon!
  • JT
    John T.
    17 July 2020 @ 00:44
    Very interesting. An excellent description of the Austrian economic model. In the physical sciences, we have lots of models for different things - sometimes one works better in some cases, sometimes another. Quantum mechanics was long shunned aftter WW2 because it was considered affiliated with the Nazis. Now that the cold war is over, I wonder if academics can come to a point where they admit that the Marx model has some use. I'm no expert, but it seems to me that the Keynesian, Austrian, and Chicago schools ignore things like wealth disparities to their peril. This boom-bust cycle won't end with a dollar collapse, but with aggravated populism and war. The fed bailouts through asset-price inflation, directly caused by QE and artificially low interest rates, causes an enormous wealth divide. This in turn causes populism and unrest worldwide and has generally ended in massive bailouts for the individual people - typically by finding paid use for them in a war effort which is not economically productive. Instead of letting political pressures boil to the point of large scale wars and/or revolutions, a simple bailout by providing a CCC-style work guarantee with an improved safety net would suffice. A homeless person should be able to go to a government office, sign up for a military-style CCC organization, move to the barracks and do infrastructure or environmental projects directed by the government. If they work hard, they could advance in the ranks or even apply for private sector work.
  • JB
    Julie B.
    17 July 2020 @ 00:29
    Great interview! Ed does an outstanding job as an interviewer as he is smart, knowledgeable, and asks good questions. Enjoyed the guest so much with his explanations and new information for me.
  • JA
    Jonathan A.
    16 July 2020 @ 23:25
    Had me until you painted Hoover and FDR with the same brush, Mr. Murphy. Really great interview nonetheless.
  • SM
    Steve M.
    16 July 2020 @ 22:05
    Excellent stuff Real Vision. Really strong content here. Keen for more of this - different schools present their case or impartial commentators dissect the pros, cons, myths, truths. I'd be surprised if the following idea is isn't already on your agenda (or I've missed you state it); but you genuinely could deliver whole courses akin to uni level learning. You understand the new content delivery systems, the need for a new approach to education and the reach / connections to make it happen. Absolute gold mine. Which is an apt pun given the macro situation we're looking at.
  • JN
    Jerrick N.
    16 July 2020 @ 22:00
    Wow this was fascinating.
  • MT
    Mark T.
    16 July 2020 @ 21:50
    Ed is a great interviewer. And his german pronunciation is spot on.
  • LB
    LUIS B.
    16 July 2020 @ 20:57
    Fantastic interview! This is RealVision!
  • DS
    David S.
    16 July 2020 @ 20:37
    The Fed was founded during the gold standard to deal with banks that were insolvent. Leverage and the lack of liquidity are the basis of any good financial crisis. By the very nature of borrowing short and lending long a bank is always insolvent on a short-term basis. An insolvent bank increases the risk of run on all banks. The Fed was chartered to determine if an insolvent US bank should be saved or not. Mr. John Pierpont Morgan Sr. did this by himself one time. Over time US politicians changed the mandate of the Fed many times to take the blame for something Congress was mandated to do – power of the purse. The Fed gives politicians plausible deniability during elections. If politicians would live up to their responsibilities, the Fed would still be in the position of dealing with just US banks. Human beings have been looking to take off any economic restrains forever. (This is known in advanced economic theory as a free lunch, or liberum prandium in Latin if you are before Congress.) Congresses and Administrations are responsible for creating the modern Fed. We the US voters are responsible for our representatives in government. It is ultimately our fault. You must know it is to fix it. DLS
  • JR
    Jeremy R.
    16 July 2020 @ 10:13
    Great to see RV picking a fantastic run of non-orthodox economists. Bob's a great voice for the Austrian school. He also wrote a strong critique of Kelton's book that MMT for anybody interested
    • WG
      Wade G.
      16 July 2020 @ 20:23
      Thanks for this link. It was a good read.
  • WG
    Wade G.
    16 July 2020 @ 19:26
    Great guest, please get him back on... quarterly would be awesome!
  • JP
    John P.
    16 July 2020 @ 19:02
    Good interview - Ed is a smart cookie and very good interviewer.
  • TP
    Tom P.
    16 July 2020 @ 19:02
    Thanks for making me feel a little more clever. Great interview!
  • RY
    Roy Y.
    16 July 2020 @ 18:50
    At last Ed, an ABCT view of the bust ... What took you so long? (just joking) ... Perhaps you should follow up with Mark Thornton and what the skyscraper curse was anticipating leading up to the recession ... Great interview ... Thanks
  • MV
    Mathieu V.
    16 July 2020 @ 18:20
    Woaw, I just discovered a new way of thinking ! Thanks so much for that ITW, and you really should get Robert back to RV every 6 months for an update.
  • DS
    David S.
    16 July 2020 @ 18:14
    In order to use economics to explain history or make predictions, we need to exchange the thought of science with points of view. Kant called this practical reason vis-a-vis the pure reason of mechanistic science - physics, chemistry etc. Since we cannot sum each person's reasons - conscious or unconscious, we need to “guess” to predict markets. It is only by using multiple points of view that we may see multiple outcomes. We make our guess and use feedback loops to check on outcomes over time. Then we make another guess. There are many more points of view in the market than economics. A stock trader watching the tape predicts trades without trying to put the overlay of economics into his reasoning. A student of market flows will see the market differently than person using net present value theory. An economic model might propose that lower interest rates will favor long-term investments. We have low interest rates now, but the future is so unpredictable it is difficult to invest in a 30-year project. A lot of loans are being made just to see if the corporation or individual will have enough money to survive the pandemic. In order to predict the possible course of economic events, the more points of view the better. Net, net in economics/finance you need multiple points of view from economic theory to the tape watcher. In politics it works differently. A politician starts with what they want and searches for an economist that will defend the action. MMT is just an easy example. DLS
  • MC
    Melvin C.
    16 July 2020 @ 17:24
    Ed, you keep getting the "most informed interviewer" comment ... It's so true. I'm looking forwards to the awards ceremony! Great job!
  • JR
    Jason R.
    16 July 2020 @ 17:19
    Thanks Bob -- great interview. As always you have a way of explaining complex ideas, and focus on the key points and differences in theories, and a passion to do so. I always feel like I gain two hours worth of knowledge in a one hour presentation. I will never forget listening to you and Jeffrey Tucker in AZ, right around the time Chaos Theory was written. You gave me a copy and chatted with me for a short time. It really shaped my thinking, mindset and career moving forward. To all that enjoyed the thinking here, check out the Mises website. It has an absolute ton of great teachings and free content from people like Bob, von Mises, Rothbard, and others.
  • KL
    Kenneth L.
    16 July 2020 @ 16:59
    Thanks for the great guest.
  • TP
    Timothy P.
    16 July 2020 @ 16:28
    A breath of fresh air after a spate of pro-MMT interviews. He calls it out early, the Fed's existence hasn't helped anything, and its beyond time we re-examine restructuring monetary policy and its governance. Ed as usual does a great job guiding the topic and getting cohesive answers from his guests. As for those that are resigned to MMT in the USA, don't worry too much - it will only be a catalyst to expedite the exit of the USD as a world reserve currency, which then will cause any proponent of such theory to slink back into the shadows, lest they be beset upon by a economically disadvantaged mob.
  • ar
    andrew r.
    16 July 2020 @ 15:44
    Terrific job from both Dr. Murphy and Mr. Harrison. (Thanks very much, Ed, for doing this. I really appreciate that you care what subscribers think. I look forward to the next installment!)
  • MK
    Martins K.
    16 July 2020 @ 15:04
    Great interview. I really enjoyed this interview and simple explanations from Robert Murphy. Please bring him back.
  • SS
    S S.
    16 July 2020 @ 12:36
    Nice theory. Not practical today. Never gonna happen in the USA. MMT is next.
  • SS
    Shanthi S.
    16 July 2020 @ 10:51
    Awesome! Bob is great. More please. Ed is one of the best interviewers around. A free market in money beats a gold standard any day of the week imo. Gold will still be king in a free market, but it will on merit and not by decree. Property rights will never be respected as long as there’s a government that mandates we use certain commodities to transact and prohibits or limits transactions in others.
  • SB
    Stewart B.
    16 July 2020 @ 09:29
    Great interview. Bob Murphy and Tom Woods had a popular podcast 'Counter-Krugman' where they discussed his analysis from an alternative perspective. Worth getting hold of these IMHO.
    • JR
      Jeremy R.
      16 July 2020 @ 10:10
      Yep great podcast, sad to see it end this year. But I love how the retrieved Krugman's economic excuses or explanations to support or criticise essentially the same government action, depending on whether it was Obama or Trump at the helm.
  • HK
    H K.
    16 July 2020 @ 09:59
    Nice. Let's get a joint interview with him and Kelton to discuss perspectives on MMT
  • AL
    Aaron L.
    16 July 2020 @ 09:03
    Great interview!