I think it is very important that we keep track of, and thank, the Austrians who predicted the housing bubble. Let this signal contribution of the praxeological school never fall down that proverbial memory hole. Why do I say this? For one thing, to give credit where credit is due. All too often, mainstream economists take credit for all and sundry; it is time, it is long past time, that some credit be publicly accorded to Austrian economics and its practitioners, and predicting the housing bubble will do quite well as one small part of these accomplishments. For another, I focus on these predictions in order to promote this school of economics, the last best hope for humanity. Were the school of thought of Menger, Bhm-Bawerk, Mises and Rothbard more widely known, and public policy more heavily based upon it, we would not be suffering from the economic quandary that now envelopes us. Previously, I blogged on this subject, mentioning that I was trying to put together a list of citations of Austrians who had predicted the housing bubble. I offered there the beginnings of this list, and asked people to help me make it more complete. I now thank the following scholars for helping me add to this bibliography: Rick Burner, Matt Dioguardi, Mike Finger, Kevinz Kevz, Julio Linares, Mickey Propadovich, John Spiers, Scott Sutton, Scott Weisman. As you will see below from the TBA’s, this bibliography is not yet in its final stage. So, gentle reader, please correct any of my remaining errors of omission or commission. I am determined to put together as complete and accurate a bibliography of this signal contribution of Austrian economics as possible. Before giving you this list, which I hope and trust you will cite in anything you write about this sorry episode of American economic history, allow me a few methodological, philosophical words. Austrian economists, qua Austrian economists, or praxeologists, do not predict. Period. In what sense, then, am I putting together this list of Austrians who have predicted the housing bubble? It is in the sense that they predicted this phenomenon not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians; see on this here. A metaphor that may clarify this distinction is that between a musician playing scales, and then rendering the music of Mozart. In a basic sense, the two are very different. Yet, surely, facility with the former renders the latter ability more sophisticated and knowledgeable. So is it with praxeology and thymology. Knowledge of the former offers no guarantee of the latter; but, it surely helps. Praxeology is the science of (Austrian) economics. It gives us apodictically certain laws, or basic axioms, or synthetic a priori truths that need not be, indeed, cannot be, tested; they can only be (empirically) illustrated. For example, here are a few axioms provided by perhaps the world’s presently active leading praxeologist, Hans Hoppe:

“Whenever two people A and B engage in a voluntary exchange, they must both expect to profit from it. And they must have reverse preference orders for the goods and services exchanged so that A values what he receives from B more highly than what he gives to him, and B must evaluate the same things the other way around. “Or consider this: Whenever an exchange is not voluntary but coerced, one party profits at the expense of the other. “Or the law of marginal utility: Whenever the supply of a good increases by one additional unit, provided each unit is regarded as of equal serviceability by a person, the value attached to this unit must decrease. For this additional unit can only be employed as a means for the attainment of a goal that is considered less valuable than the least valued goal satisfied by a unit of such good if the supply were one unit shorter. “Or take the Ricardian law of association: Of two producers, if A is more productive in the production of two types of goods than is B, they can still engage in a mutually beneficial division of labor. This is because overall physical productivity is higher if A specializes in producing one good which he can produce most efficiently, rather than both A and B producing both goods separately and autonomously. “Or as another example: Whenever minimum wage laws are enforced that require wages to be higher than existing market wages, involuntary unemployment will result. “Or as a final example: Whenever the quantity of money is increased while the demand for money to be held as cash reserve on hand is unchanged, the purchasing power of money will fall.” Another way of putting the matter is that praxeology is concerned with contrary-to-fact conditional statements that are incapable of being refuted (on this see Hlsmann). For example, a minimum wage law will raise unemployment higher than it otherwise would have been, had there been no such law; a rent control ordinance will reduce the quality and quantity of rental housing below the level that otherwise would have obtained. But will a minimum wage law necessarily result in more unemployment, or rent control in poorer housing? No: other things might have changed, to render these predictions incorrect. For example, Bill Gates might hire low skilled workers, in order to refute our analysis, or, wealth might increase, improving housing. Why are praxeologists so tentative in their statements about real world conditions? It is because economic laws are predicated upon ceteris paribus conditions; A causes B, other things remaining the same. But, in the real world, other things cannot be relied upon to always remain constant. Therefore, predictions of the “A will necessarily lead to B” type are strictly prohibited. Instead, praxeologists, but not thymologists, must limit themselves to statements of the if-A then-B variety. In sharp contrast, the thymologist or Austrian influenced economic historian labors under no such restrictions. He can go out on a limb, and make predictions about the future, which are of course subject to refutation. The scholars soon to be mentioned (I sure know how to keep you on the edge of your seats, don’t I?) laid it all on the line in the sense that their economic understanding (verstehen) could be exposed as hopelessly out of step with reality. But, in the case of the housing bubble for these economists, this was not at all true. Rather, their economic understanding was dead on.

The reason I went into this long song and dance about Austrian methodology and prediction is because of this letter I recently received in my quest for housing bubble predictions on the part of Austrian economists; its author shall remain anonymous: “This exercise reminds me of the Yogi Berra quote, u2018prediction is very hard, especially when it is about the future.’ I also recall Burt Blumert saying, u2018It’s ok to forecast the end of the world, but don’t ever give a date.” “I discovered Austrian economics and LvMI in 1989. Here my impressions of the forecasting record of the Austro-Misesian camp since: “Late 1980s – Japan’s property and equity bubbles were classic ABCT, yet Austrians were notably silent. Some of this can be attributed to the small number of Austrians at the time. Joe Salerno gave a speech about the Japan bubble at a LvMI conference in Toronto in 1999 (see here). Unfortunately this was well after the fact. “Late 1990s, early 2000s – Austrians were mostly quiet about the tech/dot-com bubble. There were exceptions among academics (Christopher Mayer, George Reisman, Guido Hulsmann, Sean Corrigan) as well as practitioners (Jim Grant, Tony Deden). I remember discussions with David Tice during the early 2000s about how Austrians were missing a golden opportunity to stick their necks out on the forecasting block regarding the tech bubble. “2002–2007 – Austrians hit a monster home run with regard to the Greenspan response to the tech bust, the GSEs, housing bubble, credit bubble, and gold. This is when LRC took off, amplifying any credibility by getting it right. Btw, the Fed-lite GMU/Koch/Cato camp largely missed these bubbles, a major forecasting black eye. “Today – We have more “Austrian” forecasters than ever. Is China a bubble? The supposedly Austrian-leaning Jim Rogers, Peter Schiff, Jim Puplava, and Adrian Day say “no.” Left-leaning Jim Chanos says “yes.” I tend to agree with Chanos. So what happens to the credibility of Austrian economics if the China bubble bursts? Will the fault lie in the theory or those applying it? “10–20 years ago, most Austrians were highly skeptical of making economic predictions. Now, after one good call, the Austrian brand is attracting a number of self-promoters who have no such qualms. They lack humility and consistency, and ultimately could discredit the brand. Perhaps this is simply the downside of gaining in popularity.” Without any further ado, here is the bibliography. Ordinarily, I would use hyperlink for the URLs that follow. In this case, I will not do so, in order to make it easier for scholars who want to cite (hint, hint) this material in their future publications.

Anderson, 2001, 2003, 2007; Beale, various dates; Blumen, 2002, 2005; Corrigan, tba; Crovelli, 2006; DeCoster, 2003; DiLorenzo, 1999; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; Mayer, 2003; Murphy, 2007, 2008; North, 2002, 2005; Paul, various dates, 2000, 2002; Polleit, 2006; Ptak, 2003; Rockwell, 2008, 462; Rogers, 2005; Rothbard, tba; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2006D, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004, 2009, Undated; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography). Anderson, William L. 2001. “The Party is Over,” February 20 Anderson, William L. 2003. “Recovery or Boomlet?” July 07 Anderson, William L. 2007. “The Party is Over – Again,” August 30 Armentano, Dominick. 2004. “Memo to Federal Reserve: Increase Interest Rates Now!” Beale, Theodore. Various dates. Blumen, Robert. 2002. “Fannie Mae Distorts Markets.” Mises Daily, June 17 Blumen, Robert. 2005. “Housing Bubble: Are We There Yet?” May 8 Bonner, Bill. tba Corrigan, Sean. tba Crovelli, Mark R. 2006. “Gold, Inflation, And… Austria?” May 31 De Coster, Karen. 2003. “The House that Greenspan Built: Irrationally Exuberant Wall Street Welfare Parasites and Their Fed-God.” September 12 DiLorenzo, Thomas J. 1999. “Regulatory Sneak Attack.” September 16 Duffy, Kevin. 2005A “The Super Bowl Indicator,” February 5 Duffy, Kevin. 2005B. “Honey, I Shrunk the Net Worth,” March 3 Duffy, Kevin. 2005C. “Alan, We Have a Problem,” August 2 Duffy, Kevin. 2005D. “Panic Now and Beat the Rush,” September 24 Duffy, Kevin. 2006. “Are Mortgage Borrowers Rational?” June 24 Duffy, Kevin. 2007A. “It’s a Mad, Mad, Mad, Mad World,” May 22 Duffy, Kevin. 2007B. “For Whom Do the Bells Toll?” Barron’s, June 18 Duffy, Kevin. 2007C. “Financial Markets on Crack,” August 22 Duffy, Kevin. 2007D. “Mr. Mozilo Goes to Washington,” September 15 Economics of contempt. 2008. “The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble.” July 16 Englund, Eric. 2004. “Monetizing Envy and America’s Housing Bubble.” July 19 Englund, Eric. 2005A. “Houses Are Consumer Durables, Not Investments,” June 8 Englund, Eric. 2005B. “Diminishing Property Rights Will Lead to a Higher Rate of Mortgage Defaults.” Englund, Eric. 2005C. “When the Housing Bubble Bursts, Will President Bush Practice Mugabenomics?” July, 19 Englund, Eric. 2005D. “When Will America’s Housing Bubble Burst?” November 4 Englund, Eric. 2006. “The Federal Reserve and Housing: A Cluster of Errors?” April 22 Englund, Eric. 2007. From Prime to Subprime, America’s Home-Mortgage Meltdown Has Just Begun.” September 24 Englund, Eric. 2008. “Countrywide Financial Corporation and the Failure of Mortgage Socialism.” January 28 French, Doug. 2005. “Condo-mania.” July 11 Grant, James. 2001. Sometimes the Economy Needs a Setback.” New York Times. September 9 Karlsson, Stefan. 2004. “America’s Unsustainable Boom.” November 8 Mayer, Chris. 2003. “The Housing Bubble.” The Free Market. Volume 23, Number 8 August Murphy, Robert P. 2007 “The Fed’s Role in the Housing Bubble.” December 28 Murphy, Robert P. 2008. “Did the Fed, or Asian Saving, Cause the Housing Bubble?” November 19 North, Gary. 2002. “How the FED Inflated the Real Estate Bubble by Pushing Down Mortgage Rates: Report As of 2002,” Reality Check, March 4 North, Gary. 2005. “Surreal Estate on the San Andreas Fault.” November 25, 2005 Paul, Ron. Various dates. Paul, Ron, 2002. Testimony to U.S. House of Representatives, July 16; text of speech in Woods (2009, 16–17): “The special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

“Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing.” Paul, Ron. 2000. “A Republic, If You Can Keep It” January 31 Paul, Ron. 2002. “Government Mortgage Schemes Distort the Housing Market,” July 16 Polleit, Thorsten. 2006. “Sowing the Seeds of the Next Crisis.” April 25 Ptak, Justin. 2003. “Government Employees, Go Home!” November 12 Rockwell, Llewellyn H, Jr. 2008. The Left, the Right, and the State. Auburn, AL: The Mises Institute Rogers, Jim. 2005. “Interview with Jim Rogers on the housing bubble.” April 22 Rothbard, Murray N. tba Schiff, Peter. Undated A. Schiff, Peter. Undated B. Schiff, Peter. Undated C. Schiff, Peter. Undated D. Schiff, Peter. 2003A. Commentary, March Schiff, Peter. 2003B. Commentary, April Schiff, Peter. 2003C. Commentary, June Schiff, Peter. 2004A. Commentary, May Schiff, Peter. 2004B. Commentary, June Schiff, Peter. 2005A. Commentary, April Schiff, Peter. 2005B. Commentary, July Schiff, Peter. 2005C. Commentary, August Schiff, Peter. 2005D. Commentary, October Schiff, Peter. 2006A. Appearance on CNBC, January Schiff, Peter. 2006B. Speech to the Money Show Conference, February Schiff, Peter. 2006C. Speech to the Mortgage Bankers Assoc. Schiff, Peter. 2006D. Mortgage Bankers Speech to the Western Regional Mortgage Bankers Conference in Las Vegas; November 13

Schiff, Peter. 2007A. Crash Proof: How to Profit From the Coming Economic Collapse (1st edition) New York, N.Y.: Wiley Schiff, Peter. 2007B. Appearance on Fox News – January 12 Sennholz, Hans F. 2002. “The Fed is Culpable.” November 11 Shostak, Frank. 2003. “Housing Bubble: Myth or Reality?” March 4 Shostak, Frank. 2005 “Is There a Glut of Saving?” August 4 Thornton, Mark. 2004. “Housing: too good to be true.” June 4 Thornton, Mark. 2009. “The Economics of Housing Bubbles.” America’s Housing Crisis: A Case of Government Failure, Benjamin Powell and Randall Holcombe, eds., Transaction Publishers Thornton, Mark. Undated. Trask, H.A. Scott. 2003. “Reflation in American History.” October 31 Wenzel, Robert. 2004. “Government Isn’t God: FDIC Sticks Banks With Bad Loans and Sticks Borrowers With Subprime Junk.” July 21 Woods, Thomas E. Jr. 2009. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Washington D.C.: Regnery Publishing

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