Mises finally gets his rightful due from the Wall Street Journal:
“Theorie des Geldes” did not become the playbook for policy makers. The 1920s were marked by the brave new era of the Federal Reserve system promoting inflationary credit expansion and with it permanent prosperity. The nerve of this Doubting-Thomas, perma-bear, crazy Kraut! Sadly, poor Ludwig was very nearly alone in warning of the collapse to come from this credit expansion. In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming “A great crash is coming, and I don’t want my name in any way connected with it.”
We all know what happened next. Pretty much right out of Mises’s script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed.
This is why I’m pretty relaxed about RGD. As an economist, I’m not fit to replace the battery on Mises’s calculator. If he wasn’t afraid to be dismissed as a lunatic for standing against the socialist tide, I’m not afraid to risk the same for standing against the Neo-Keynesian one. The market and the GDP statistics are totally irrelevant in my opinion. The former looks terrible when measured in terms of gold or any foreign currency and the latter have been twisted and contorted so greatly that I suspect it will have to be trashed altogether by the time the Great Depression 2.0 comes to an end.
Remember that GDP comparisons to the Great Depression are intrinsically questionable because GDP didn’t exist until it was created in order to measure industrial output in World War II. Which, astute history buffs will recall took place after the economic events of 1929-1933.