Tuesday, 17 April 2012


I think I can simply state what it is about The Great Reflation which makes me a little uncertain.  It blurs the distinction between the author's descriptive and prescriptive tendencies.  Clearly as an engaged political animal he has a lot of opinions in his head about how economies should be run, and in particular concerning the behaviour of central banks.  That's fair enough for him to have this opinion.  On the other hand, as the author of an investment advice book, he has a responsibility to have a clear-eyed view of how the markets are, not how he'd like them to be.  Now, I'm not saying that his advice is predicated on any kind of assumption of the inevitability of some kind of Austrian utopia; he does a decent job characterising the difference between current reality  and the Austrian model, but for my taste, his description of this reality is too clouded with Austrian bias. I could well imagine a fully signed-up Austrian economist being able to characterise politico-economic reality without so much drum-beating and propagandising.  And indeed I reckon it would result in a book with better investment advice.  I'd rather know that the market contained participants of an Austrian persuasion and those positively disposed towards paper money growth.  We often pitch Austrians against Keynes, but I think they should be pitted against John Law.  This is a decent binary split of all market participants, across any number of asset classes.  And each has their time of ascendancy and recovery.