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Ignore the Doomsday Chorus

NEW YORK (TheStreet) -- There are always economic doomsayers. But if everyone was screaming "buy, buy, buy," that would be by signal to "sell, sell, sell."

What most of today's Doomsday Chorus has in common is a devotion to libertarianism and to Austrian Economics, which holds that there are absolute rules about economic behavior that can be deduced logically, and that government is powerless against these rules.

Robert Murphy, a scholar associated with the Mises Institute, whose slogan is "Advancing Austrian economics, liberty and peace," explained the difference between Austrians and monetarists such as outgoing Federal Reserve Board chairman Ben Bernanke in a 2011 essay for the Institute.

Milton Friedman, the "Chicago School" economist and monetarist, blamed the Great Depression on tight money, Murphy wrote, and Bernanke's policies aimed to push up the money supply to compensate. "These views are anathema to modern Austrians,"  who "think the central bank should be abolished."

Thus, if you liked Ron Paul or think the Mises Institute makes economic sense, the current economy looks like a bubble that is bound to pop. With a whole school of economics riding on the outcome, seldom has the Doomsday Chorus featured such a distinguished company as it does today.

The best known among today's Cassandras may be David Stockman, who headed the Office of Management and Budget under President Reagan, and has written a best-selling book, The Great Deformation: The Corruption of Capitalism in America, summarizing the Austrian case against both monetarism and the fiscal theories of John Maynard Keynes.

"Friedman's error about the Great Depression led him, albeit inadvertently, into the deep waters of statism," Stockman told the Mises Institute last year. "He claimed to be the tribune of free markets, but in urging [Richard Nixon] to scrap the Bretton Woods gold standard he inaugurated the present era of fiat central banking."

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