Austerity is the watchword of year; the world is now paying the price for decades of easy money policies. One school of economic thought, that of Friedrich Hayek and Ludwig von Mises (the Austrian School of Economics), supports the notion of austerity, but no one in power was talking austerity in 2008, when the financial crisis hit. Big government and John Maynard Keynes (Chicago School of Economics) were at the helm, both fans of money printing and zero-interest-rate policies.
Skousen recently visited Poland to give a series of lectures on Austrian economics. His lectures were packed with business leaders, academics, and students who had an insatiable interest in Austrian economics and finance.
Particularly in Eastern Europe, leaders are focused on adopting sound monetary and fiscal policies along the classical/Austrian lines. The supply-side flat tax movement is also popular.
Right now Estonia is in the limelight because it’s the fastest-growing economy in the region, expanding at a 7.6% rate. It is the only Eurozone country with a budget surplus. National debt is just 6% of GDP. How did they bounce back from the devastating 2008-2009 crisis?
“I can answer in [three] words,” states Peeter Koppel, investment strategist at the SEB Bank: “Austerity, austerity, austerity.” Estonia went through three years of belt-tightening. Public sector wages were cut, the pension age was raised, benefits were reduced. “It was very difficult, but we managed it,” explains Juhan Parts, Estonia’s minister of economy and communication. This “little country that could” is now leading the way to recovery and prosperity. The Austrian way.
To read mark Skousen’s article: Austerity’s Prophets
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