The Austrian School of economics is a school of economic thought which advocates a methodological individualist approach to economics called praxeology, the theory that money is non-neutral, the theory that interest rates and profits are determined by the interaction of diminishing marginal utility with diminishing marginal productivity of time and time preferences, the theory that the capital structure of economies consists of heterogeneous goods that have multispecific uses which must be aligned (see Austrian business cycle theory), and emphasizes the organizing power of the price mechanism (see economic calculation debate).^[1]

Austrian views are heterodox and mainstream economists are generally critical of its methodology.^[2][3][4][5] Whereas mainstream economists generally use economic models and statistical methods to model economic behavior, Austrian School economists argue that they are a flawed, unreliable, and insufficient means of analyzing economic behavior and evaluating economic theories. Instead, they advocate deriving economic theory logically from basic principles of human action, a study called praxeology. Furthermore, whereas experimental research and natural experiments are often used in mainstream economics, Austrians generally hold that testability in economics and precise mathematical modeling of an economic market are virtually impossible. They argue that modeling a market relies on human actors who cannot be placed in a lab setting without altering their would-be actions. Supporters of using models of market behavior to analyze and test economic theory argue that economists have developed numerous experiments that elicit useful information about individual preferences.^[6][7]

Many theories developed by early Austrian economists have been absorbed by mainstream economics. Austrian theories have also significantly influenced theories in mainstream economic thought, including the subjective theory of value, marginalism, and the economic calculation debate.^[8] From the middle of the 20th century onwards, the Austrian school has been considered outside the mainstream of economic thought. Its reputation rose in the mid-1970s, after Austrian economist Friedrich Hayek shared the 1974 Nobel Prize in Economics.^[9] According to Austrian economist Peter J. Boettke, the position of the Austrian School within the economics profession has changed several times from mainstream to heterodox, and is now a distinctly minority position.^[3]

Austrians are generally advocates of laissez-faire policies.^[10] The most common economic interventionist regulation Austrians support are regulations to prevent fractional reserve banking.^[11]

Methodology[link]

Ludwig von Mises

Methodology is where Austrians differ most significantly from other schools of economic thought. Mainstream schools, such as Keynesians and Monetarists, adopt empirical, mathematical, and statistical methods, and focus on induction to construct and test theories. Austrians reject empirical statistical methods, natural experiments, and constructed experiments as tools applicable to economics, arguing that while it is appropriate in the natural sciences where factors can be isolated in laboratory conditions, the actions of humans are too complex for such a treatment because humans are not passive and non-adaptive subjects. Austrian economist Jeffrey Herbener has argued that "there are no statistical characteristics to human behavior. It is purposeful rather than random, and changeable rather than constant".^[12] Austrians argue one should instead isolate the logical processes of human action. Mises called this discipline "praxeology."^[13] The Austrian praxeological method is based on the heavy use of logical deduction from what they argue to be undeniable, self-evident axioms or irrefutable facts about human existence.^[14]

According to Austrians, deduction is preferred to induction in interpreting economic developments, since if performed correctly, it leads to certain conclusions and inferences that must be true if the underlying assumptions are accurate. Austrians hold that induction does not assure certainty like deduction, as real world economic data are inherently ambiguous and subject to a multitude of influences which cannot be separated or quantified, one cause or correlation from another. Austrians therefore argue that empirical statistical methods, natural experiments, and constructed experiments have no way of verifying cause and effect in real world economic events, since economic data can be correlated to multiple potential chains of causation.^[15]

Mainstream economists generally argue that conclusions reached by pure logical deduction are limited and weak.^[16] Economists Bryan Caplan and Paul A. Samuelson have argued that this methodology has led to the Austrian School being generally dismissed within mainstream economics.^[17]

The Austrian School view of the market system differs from that of neoclassical economics. Austrians reject the possibility of consumers being indifferent between choices – neoclassical theory says it is possible, whereas Mises rejected it as being “impossible to observe in practice.” Mises argued that utility functions are ordinal, and not cardinal. Therefore, one can only rank preferences and cannot measure their intensity. Austrians reject any conclusions based on cardinal utility and criticize mainstream economics for generally accepting cardinality, despite neoclassical economists commonly stating that their work holds only for ordinal preferences.^[18] Mises argued that numerically accurate "probabilities" could never be assigned to singular cases because the unique confluence of events in each moment of time in real markets makes the assignment of "objective" probabilities unrealistic, as these events are intrinsically unique and not capable of numerical probabilistic modeling. Mises argued that the application of probabilistic uncertainty would require the ability to exactly replicate objectively similar events to obtain an accurate understanding of the range of probabilistic outcomes of any event, and this is not possible in real markets, where past market events intimately affect the present and the future.^[19]

Austrian economist Steven Horwitz argues that Austrian methodology is consistent with macroeconomics and that Austrian macroeconomics can be expressed in terms of microeconomic foundations.^[20] Austrian economist Roger Garrison argues that Austrian macroeconomic theory can be correctly expressed in terms of diagrammatic models.^[21]

Theories[link]

Business cycles[link]

Background[link]

The Austrian theory of the business cycle (or "ABCT") varies significantly from mainstream theories. In contrast to most mainstream theories on business cycles, Austrians focus on the credit cycle as the primary cause of most business cycles. Economists such as Gordon Tullock,^[22] Bryan Caplan,^[23] Milton Friedman,^[24][25] and Paul Krugman^[26] have said that they regard the theory as incorrect. The Austrian theory of the business cycle is now rarely discussed by mainstream economists, but was more actively debated in the mid-20th century.^[27] The theory was created by Hayek, by integrating Böhm-Bawerk's theory of capital and interest with Mises's arguments concerning how an expansion of the money supply or government manipulation of interest rates contributed to malinvestment.

Empirical research by economists regarding the accuracy of the Austrian business cycle theory has generated disparate conclusions, though most research within mainstream economics regarding the theory concludes that the theory is inconsistent with empirical evidence. In 1969, Milton Friedman argued that the theory is not consistent with empirical evidence.^[28] He analyzed the issue using newer data in 1993, and reached the same conclusion.^[29] In 2001, Austrian economist James P. Keeler argued that the theory is consistent with empirical evidence.^[30] In 2006, Austrian economist Robert Mulligan argued that the theory is consistent with empirical evidence.^[31]

According to most economic historians, economies have experienced less severe boom-bust cycles after World War II, because governments have addressed the problem of economic recessions.^{[32][33][34][35]} They argue that this has especially been true since the 1980s because central banks were granted more independence and started using monetary policy to stabilize the business cycle, an event known as The Great Moderation.^[36]

Assertions[link]

According to the theory, a boom-bust cycle of malinvestment is generated by excessive and unsustainable credit expansion to businesses and individual borrowers by the banks.^[37] This credit creation makes it appear as if the supply of "saved funds" ready for investment has increased, for the effect is the same: the supply of funds for investment purposes increases, and the interest rate is lowered.^[38] Borrowers, in short, are misled by the bank inflation into believing that the supply of saved funds (the pool of "deferred" funds ready to be invested) is greater than it really is. When the pool of "saved funds" increases, entrepreneurs invest in "longer process of production," i.e., the capital structure is lengthened, especially in the "higher orders", most remote from the consumer. Borrowers take their newly acquired funds and bid up the prices of capital and other producers' goods, which, in the theory, stimulates a shift of investment from consumer goods to capital goods industries. Austrians further contend that such a shift is unsustainable and must reverse itself in due course. They conclude that the longer the unsustainable shift in capital goods industries continues, the more violent and disruptive the necessary re-adjustment process. While agreeing with economist Tyler Cowen, Bryan Caplan has stated that he also denies "that the artificially stimulated investments have any tendency to become malinvestments."^[39]

The preference by entrepreneurs for longer term investments can be shown graphically by using any discounted cash flow model. Lower interest rates increase the relative value of cash flows that come in the future. When modeling an investment opportunity, if interest rates are artificially low, entrepreneurs are led to believe the income they will receive in the future is sufficient to cover their near term investment costs. Therefore, investments that would not make sense with a 10% cost of funds become feasible with a prevailing interest rate of 5%.

The proportion of consumption to saving or investment is determined by people's time preferences, which is the degree to which they prefer present to future satisfactions. Thus, the pure interest rate is determined by the time preferences of the individuals in society, and the final market rates of interest reflect the pure interest rate plus or minus the entrepreneurial risk and purchasing power components.^[40]

Many entrepreneurs can make the same mistake at the same time (i.e. many believe investment funds are really available for long term projects when in fact the pool of available funds has come from credit creation - not real savings out of the existing money supply) because the debasement of the means of exchange is universal, . As they are all competing for the same pool of capital and market share, some entrepreneurs begin to borrow simply to avoid being "overrun" by other entrepreneurs who may take advantage of the lower interest rates to invest in more up-to-date capital infrastructure. A tendency towards over-investment and speculative borrowing in this "artificial" low interest rate environment is therefore almost inevitable.^[37]

This new money then percolates downward from the business borrowers to the factors of production: to the landowners and capital owners who sold assets to the newly indebted entrepreneurs, and then to the other factors of production in wages, rent, and interest. Austrians conclude that, since time preferences have not changed, people will rush to reestablish the old proportions, and demand will shift back from the higher to the lower orders. In other words, depositors will tend to remove cash from the banking system and spend it (not save it), banks will then ask their borrowers for payment and interest rates and credit conditions will deteriorate.^[37]

Austrians argue that capital goods industries will find that their investments have been in error; that what they thought profitable really fails for lack of demand by their entrepreneurial customers. Higher orders of production will have turned out to be wasteful, and the malinvestment must be liquidated. In other words, the particular types of investments made during the monetary boom were inappropriate and "wrong" from the perspective of the long-term financial sustainability of the market because the price signals stimulating the investment were distorted by fractional reserve banking's recursive lending "ballooning" the pricing structure in various capital markets. This concept is dependent on notion of the "heterogeneity of capital", where Austrians emphasize that the mere macroeconomic "total" of investment does not adequately capture whether this investment is genuinely sustainable or productive, due to the inability of the raw numbers to reveal the particular investment activities being undertaken and the inherent inability of the numbers to reveal whether these particular investment activities were appropriate and economically sustainable given people's real preferences.^[41]

Austrians argue that a boom taking place under these circumstances is actually a period of wasteful malinvestment, a "false boom" where the particular kinds of investments undertaken during the period of fiat money expansion are revealed to lead nowhere but to insolvency and unsustainability. It is the time when errors are made, when speculative borrowing has driven up prices for assets and capital to unsustainable levels, due to low interest rates "artificially" increasing the money supply and triggering an unsustainable injection of fiat money "funds" available for investment into the system, thereby tampering with the complex pricing mechanism of the free market. "Real" savings would have required higher interest rates to encourage depositors to save their money in term deposits to invest in longer term projects under a stable money supply. According to Mises's work, the artificial stimulus caused by bank-created credit causes a generalized speculative investment bubble, not justified by the long-term structure of the market.^[37]

Mises further argues that a "crisis" (or "credit crunch") arrives when the consumers come to reestablish their desired allocation of saving and consumption at prevailing interest rates.^[41][42] Mises conjectured that the "recession" or "depression" is actually the process by which the economy adjusts to the wastes and errors of the monetary boom, and reestablishes efficient service of sustainable consumer desires.^[41][42]

Austrians argue that continually expanding bank credit can keep the borrowers one step ahead of consumer retribution (with the help of successively lower interest rates from the central bank). In the theory, this postpones the "day of reckoning" and defers the collapse of unsustainably inflated asset prices.^[41][43] It can also be temporarily put off by exogenous events such as the "cheap" or free acquisition of marketable resources by market participants and the banks funding the borrowing (such as the acquisition of land from local governments, or in extreme cases, the acquisition of foreign land through the waging of war).^[44]

Austrians argue that the monetary boom ends when bank credit expansion finally stops - when no further investments can be found which provide adequate returns for speculative borrowers at prevailing interest rates. They further argue that the longer the "false" monetary boom goes on, the bigger and more speculative the borrowing, the more wasteful the errors committed and the longer and more severe will be the necessary bankruptcies, foreclosures, and depression readjustment.^[41]

It is important to point out that Austrians do not argue that fiscal restraint or "austerity" will bring about economic growth.^[45] Rather, they argue that all attempts by central governments to prop up asset prices, bail out insolvent banks, or "stimulate" the economy with deficit spending will only make the misallocations and malinvestments worse, prolonging the depression and adjustment necessary to return to stable growth.^[45] Austrians argue the policy error rests in the government's (and central bank's) weakness or negligence in allowing the "false" credit-fueled boom to begin in the first place, not in having it end with fiscal and monetary "austerity". According to Ludwig von Mises:^[41]

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

The role of central banks[link]

Austrians generally argue that inherently damaging and ineffective central bank policies, including unsustainable expansion of bank credit through fractional reserve banking, are the predominant cause of most business cycles, as they tend to set artificial interest rates too low for too long, resulting in excessive credit creation, speculative "bubbles", and artificially low savings.^[46] Under fiat monetary systems, a central bank creates new money when it lends to member banks, and this money is multiplied many times over through the money creation process of the private banks. This new bank-created money enters the loan market and provides a lower rate of interest than that which would prevail if the money supply were stable.^[37][38] However, Murray Rothbard paid particular attention to the role of central banks in creating an environment of loose credit prior to the onset of the Great Depression, and the subsequent ineffectiveness of central bank policies, which simply delayed necessary price adjustments and prolonged market dysfunction.^[45] Rothbard begins with the premise that in a market with no centralized monetary authority, there would be no simultaneous cluster of malinvestments or entrepreneurial errors, since astute entrepreneurs would not all make errors at the same time and would quickly take advantage of any temporary, isolated mispricing. In addition, in an open, non-centralized (uninsured) capital market, astute bankers would shy away from speculative lending and uninsured depositors would carefully monitor the balance sheets of risky financial institutions, tempering any speculative excesses that arose sporadically in the finance markets. In Rothbard's view, the cycle of generalized malinvestment is greatly exacerbated by centralized monetary intervention in the money markets by the central bank. Such propositions from Rothbard prompted criticism from Bryan Caplan, who questions "Why does Rothbard think businessmen are so incompetent at forecasting government policy? He credits them with entrepreneurial foresight about all market-generated conditions, but curiously finds them unable to forecast government policy, or even to avoid falling prey to simple accounting illusions generated by inflation and deflation... Particularly in interventionist economies, it would seem that natural selection would weed out businesspeople with such a gigantic blind spot."^[39]

Rothbard argues that an over-encouragement to borrow and lend is initiated by the mispricing of credit via the central bank's centralized control over interest rates and its need to protect banks from periodic bank runs (which Austrians believe then causes interest rates to be set too low for too long when compared to the rates that would prevail in a genuine non-central bank dominated free market).^[37][42]

Capital and interest[link]

Eugen Böhm von Bawerk

The Austrian theory of capital and interest was created by Böhm-Bawerk. He created the theory as a response to Marx's theories on capital. Böhm-Bawerk's theory centered on the untenability of the labor theory of value in the light of the transformation problem. He also argued that capitalists do not exploit workers; they accommodate workers by providing them with income well in advance of the revenue from the output they helped to produce. Böhm-Bawerk's theory equates capital intensity with the degree of roundaboutness of production processes. Böhm-Bawerk also argued that the law of marginal utility necessarily implies the classical law of costs. He created a theory of interest and of profit in equilibrium based upon the interaction of diminishing marginal utility with diminishing marginal productivity of time and time preferences.^[47]

Austrians therefore reject the notion that interest rates are determined by liquidity preference. In his book America's Great Depression, Rothbard argued that interest rates are instead determined by time preference. Says Rothbard, "Increased hoarding can either come from funds formerly consumed, from funds formerly invested, or from a mixture of both that leaves the old consumption-investment proportion unchanged. Unless time preferences change, the last alternative will be the one adopted. Thus, the rate of interest depends solely on time preference, and not at all on "liquidity preference." In fact, if the increased hoards come mainly out of consumption, an increased demand for money will cause interest rates to fall—because time preferences have fallen."^[48]

Economic calculation problem[link]

Friedrich Hayek

The economic calculation problem is a criticism of socialist economics. It was first proposed by Max Weber in 1920. This led to Ludwig von Mises discussing Weber's idea with his student Friedrich Hayek, who expanded upon it to such an extent that it became a key reason cited for the awarding of his Nobel prize.^[49][50] The problem referred to is that of how to distribute resources rationally in an economy. The capitalist solution is the price mechanism; Mises and Hayek argued that this is the only viable solution, as the price mechanism co-ordinates supply and investment decisions most efficiently. Without the information efficiently and effectively provided by market prices, socialism lacks a method to efficiently allocate resources over an extended period of time in any market where the price mechanism is effective (an example where the price mechanism may not work is in the relatively confined area of public and common goods). Those who agree with this criticism argue it is a refutation of socialism and that it shows that a socialist planned economy could never work in the long term for the vast bulk of the economy and has very limited potential application. The debate raged in the 1920s and 1930s, and that specific period of the debate has come to be known by historians of economic thought as The Socialist Calculation Debate.^[51]

Ludwig von Mises argued in a famous 1920 article "Economic Calculation in the Socialist Commonwealth" that the pricing systems in socialist economies were necessarily deficient because if government owned the means of production, then no prices could be obtained for capital goods as they were merely internal transfers of goods in a socialist system and not "objects of exchange," unlike final goods. Therefore, they were unpriced and hence the system would be necessarily inefficient since the central planners would not know how to allocate the available resources efficiently.^[51] This led him to declare "…that rational economic activity is impossible in a socialist commonwealth."^[52] Mises's declaration has been criticized as overstating the strength of his case, in describing socialism as impossible, rather than having to contend with a source of inefficiency.^[5][53]

Inflation[link]

Murray Rothbard

Ludwig von Mises argues that inflation only results when the supply of money outpaces demand for money:

In theoretical investigation there is only one meaning that can rationally be attached to the expression Inflation: an increase in the quantity of money (in the broader sense of the term, so as to include fiduciary media as well), that is not offset by a corresponding increase in the need for money (again in the broader sense of the term), so that a fall in the objective exchange-value of money must occur.^[54]

While supporters of free banking maintain the above definition, Murray Rothbard argued that inflation is by definition always and everywhere an increase in the money supply (i.e. units of currency or means of exchange), which in turn leads to a nominal price level that is higher than it would have been without the inflation, for assets (such as housing) and other goods and services in demand, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer goods and services.

Given that all major economies currently have a central bank supporting the private banking system, money can be supplied into these economies by way of bank-created credit (or debt).^[55] Austrians therefore regard the state-sponsored central bank as the main cause of inflation, because they regard the bank as the institution charged with the creation of new money.^{[56][unreliable source?]} When newly created currency reserves are injected into the fractional-reserve banking system, private financial institutions generally choose to further expand the level of bank credit, which multiplies the inflationary effect many times over.^[57]

The Austrian School also views the "contemporary" definition of inflation as inherently misleading in that it draws attention only to the effect of inflation (rising prices) and does not address the "true" phenomenon of inflation, which they believe simply involves an increase in the money supply (or the debasement of the means of exchange). They argue that this semantic difference is important in defining inflation and finding a cure for inflation. Austrians maintain the most effective cure is the strict maintenance of a stable money supply.^[58] Ludwig von Mises, the seminal scholar of the Austrian School, argues that:

Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term "inflation" to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.^[59]

Following their definition, Austrians measure inflation by calculating the growth of what they call "the true money supply", i.e. how many new units of money which are available for immediate use in exchange have been created over a specified period of time.^[60][61][62]

This interpretation of inflation implies that, within a centralized banking system, inflation is usually the result of action taken by the central government or its central bank,^[63] which permits or allows an increase in the money supply.^[64] Mises includes bank credit as a significant contributor to inflation; the value of bank credit generated by private financial institutions and held within checking accounts greatly exceeds the value of physical paper bills and metallic coins issued by the Federal government (see Figure 1). In addition to state-induced monetary expansion via printing of paper money, Austrians also maintain that the effects of increasing the money supply are exacerbated by the credit expansion performed by private financial institutions practising fractional-reserve banking system, legally permitted in most economic and financial systems in the world.^[65]

Austrians hold that states use monetary inflation as one of the three means by which it can fund its activities, the other two being taxing and borrowing.^[66] Therefore, Austrians often seek to identify reasons why the state resorts to allowing the creation new money (whether fiat paper or electronic money) and what the new money is used for. Various forms of spending are often cited as reasons for resorting to inflation and borrowing, as this can be a short term way of acquiring marketable resources and is often favored by desperate, indebted governments.^[67] In other cases, the central bank may try avoid or defer the widespread bankruptcies and insolvencies which cause economic recessions by artificially trying to "stimulate" the economy through money supply growth and further borrowing via artificially low interest rates.^[68]

Accordingly, many Austrians support the abolition of the central banks and the fractional-reserve banking system, advocating either a gold standard or that the market should choose what is used as money.^[69][70]

At the beginning of his career Alan Greenspan, former chairman of the Federal Reserve, was also a strong advocate of the gold standard as a protector of economic liberty:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.^[71]

Advocates argued that the gold standard would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth ("inflation") would never spiral out of control.^[72][73] Ludwig von Mises argues that civil liberties would be better protected:

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.^[74]

Opportunity cost[link]

Friedrich von Wieser

The opportunity cost doctrine was first explicitly formulated by the Austrian economist Friedrich von Wieser in the late 19th century.^[75] Opportunity cost is the cost of any activity measured in terms of the value of the next best alternative foregone (that is not chosen). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices.^[76] The opportunity cost is also the cost of the foregone products after making a choice. Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice".^[77] The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.^[78] Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output foregone, lost time, pleasure or any other benefit that provides utility should also be considered opportunity costs.

Etymology[link]

The Austrian School derives its name from the identity of its founders and early supporters, who were citizens of Austria-Hungary, including Carl Menger, Eugen von Böhm-Bawerk, Ludwig von Mises, and Friedrich Hayek.^[79] In 1883, Menger published Investigations into the Method of the Social Sciences with Special Reference to Economics, which attacked the methods of the Historical school. Gustav von Schmoller, a leader of the Historical school, responded with an unfavorable review, coining the term "Austrian School" in an attempt to characterize the school as provincial.^[80] The label remained and was adopted by the adherents themselves. Currently, adherents of the Austrian School can come from any part of the world, but they are often referred to as "Austrian economists" or "Austrians" and their work as "Austrian economics".

History[link]

Precursors[link]

Jean-Baptiste Say

Classical economics focused on the labor theory of value, which holds that the value of a commodity is equal to the amount of labour required to produce it. French classical economists Jean-Baptiste Say and Frédéric Bastiat argued that value is subjective. In the late 19th century, attention then focused on the concepts of “marginal” cost and value. The subjectivist and marginalist approaches are generally considered to be precursors to the Austrian School. Austrian economist Murray Rothbard has argued that the roots of the Austrian School came from the teachings of the School of Salamanca in the 15th century and Physiocrats in the 18th century.^[81]

Carl Menger's 1871 book, Principles of Economics, is generally considered the founding of the Austrian School. The book was one of the first modern treatises to advance the theory of marginal utility. The Austrian School was one of three founding currents of the marginalist revolution of the 1870s, with its major contribution being the introduction of the subjectivist approach in economics.^{[82][page needed]} While marginalism was generally influential, there was also a more specific school that began to coalesce around Menger's work, which came to be known as the “Psychological School,” “Vienna School,” or “Austrian School.”^[83] Thorstein Veblen introduced the term neoclassical economics in his Preconceptions of Economic Science (1900) to distinguish marginalists in the objective cost tradition of Alfred Marshall from those in the subjective valuation tradition of the Austrian School.^{[84][85][not specific enough to verify]}

First Wave[link]

Carl Menger

The school originated in Vienna, in the Austrian Empire. However, later adherents of the school such as > The School owes its name to members of the German Historical School of economics, who argued against the Austrians during the Methodenstreit ("methodology struggle"), in which the Austrians defended the reliance that classical economists placed upon deductive logic.

Carl Menger contributions to economic theory was closely followed by that of Böhm-Bawerk and Friedrich von Wieser. These three economists became what is known as the "first wave" of the Austrian School. Austrians developed a sense of themselves as a school distinct from neoclassical economics during the economic calculation debate with socialist economists. Ludwig von Mises and his student Friedrich Hayek represented the Austrian position in contending that without monetary prices and private property, meaningful economic calculation is virtually impossible.^[86] Böhm-Bawerk wrote extensive critiques of Karl Marx in the 1880s and 1890s, as was part of the Austrians' participation in the late 19th Century Methodenstreit, during which they attacked the Hegelian doctrines of the Historical School.

Twentieth century[link]

Israel Kirzner

By the mid-1930s, much of mainstream economics had absorbed what were seen as the important contributions of the Austrians.^[3] After World War II, Austrian economics was ill-thought of by most economists because it rejected mathematical and statistical methods in the study of economics.^[87]

Austrian economics after 1940 can be divided into two schools of economic thought. One, exemplified by Ludwig von Mises, regards neoclassical methodology to be irredeemably flawed; the other, exemplified by Friedrich Hayek, accepts a large part of neoclassical methodology.^[5][88]

The reputation of the Austrian School rose somewhat in the late-20th century due in part to the work of Israel Kirzner and Ludwig Lachmann, and renewed interest in the work of Hayek after he won the Nobel Memorial Prize in Economic Sciences.^[9] Hayek's work was influential in the revival of laissez-faire thought in the 20th century.^[10][89] Following Hayek, one of Mises's students, Murray Rothbard, became prominent in both Austrian applied theory and libertarian philosophical thought.^[90]

Twenty-first century[link]

Several Austrian economists have made contributions to Austrian economics in the twenty-first century, including Anthony Carilli,^[91] Gregory Dempster,^[91] Roger Garrison,^[92] Steven Horwitz,^[20] and Robert Murphy.^[93] Garrison and Horwitz have contributed to Austrian macroeconomics. Carlilli, Dempster, Garrison, and Murphy have contributed to the Austrian business cycle theory.

Influence[link]

Many theories developed by "first wave" Austrian economists have been absorbed by mainstream economics. These include Carl Menger's theories on marginal utility, Friedrich von Wieser's theories on opportunity cost, and Eugen von Böhm-Bawerk's theories on time preference, as well as Menger and Böhm-Bawerk's criticisms of Marxian economics.

The former U.S. Federal Reserve Chairman, Alan Greenspan, speaking of the originators of the School, said in 2000, "the Austrian School have reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in this country."^[94] Nobel Laureate James M. Buchanan has stated that he would not object to being identified as an Austrian economist.^[95][96][97] Republican U.S. congressman Ron Paul is a firm believer in Austrian School economics and has authored six books on the subject.^[98][99] Paul's former economic adviser, Peter Schiff,^[100] is an adherent of the Austrian School.^[101] Jim Rogers, investor and financial commentator, also considers himself of the Austrian School of economics.^[102] Chinese economist Zhang Weiyin, who is known in China for his advocacy of free market reforms, supports some Austrian theories such as the Austrian theory of the business cycle.^[103] Currently, universities with a significant Austrian presence are George Mason University, Loyola University New Orleans, and Auburn University in the United States and Universidad Francisco Marroquín in Guatemala. Austrian economic ideas are also promoted by bodies such as the Mises Institute and the Foundation for Economic Education.

Criticisms[link]

General criticisms[link]

Some economists have argued that Austrians are often averse to the use of mathematics and statistics in economics.^[104]

Economist Bryan Caplan argues that Austrians have often misunderstood modern economics, causing them to overstate their differences with it. For example, many Austrians object to the use of cardinal utility in microeconomic theory; however, microeconomic theorists go to great pains to show that their results hold for all strictly monotonic transformations of utility, and so are true for purely ordinal preferences.^[105][106] The result is that conclusions about utility preferences hold no matter what values are assigned to them. Austrian economist Jörg Guido Hülsmann responded by arguing that Caplan's criticism is inconsistent.^[107]

Paul Krugman has stated that because Austrians do not use "explicit models" they are unaware of holes in their own thinking.^[108]

Economist Benjamin Klein has criticized the economic methodological work of Austrian economist Israel M. Kirzner. While praising Kirzner for highlighting shortcomings in traditional methodology, Klein argued that Kirzner did not provide a viable alternative for economic methodology.^[109]

Methodology[link]

Mainstream economists generally argue that Austrian economics lacks scientific rigor, rejects the scientific method, and rejects the use of empirical data.^{[5][104][110]} Some economists describe Austrian methodology as being a priori or non-empirical.^{[5][17][104][111]}

Thomas Mayer has argued that Austrians have advocated a rejection of scientific methods which involve directly using empirical data in the development of falsifiable theories.^[110][111]

Mark Blaug has criticized over-reliance on methodological individualism, arguing it would rule out all macroeconomic propositions that cannot be reduced to microeconomic ones, and hence reject almost the whole of received macroeconomics.^[112]

Business cycle theory[link]

According to most mainstream economists, the Austrian business cycle theory is incorrect.^[32]

Some mainstream economists argue that the Austrian business cycle theory requires bankers and investors to exhibit a kind of irrationality, because their theory requires bankers to be regularly fooled into making unprofitable investments by temporarily low interest rates.^[5][22][113] In response, historian Thomas Woods has argued that few bankers and investors are familiar enough with the Austrian business cycle theory to consistently make sound investment decisions. Austrian economists Anthony Carilli and Gregory Dempster have also argued that a banker or firm loses market share if it does not borrow or loan at a magnitude consistent with current interest rates, regardless of whether rates are below their natural levels. Thus businesses are forced to operate as though rates were set appropriately, because the consequence of a single entity deviating would be a loss of business.^[91] Austrian economist Robert Murphy has also argued that it is difficult for bankers and investors to make sound business choices because they cannot know what the interest rate would be if it were set by the market.^[93]

Economist Paul Krugman has argued that the theory cannot explain changes in unemployment over the business cycle. Austrian business cycle theory postulates that business cycles are caused by the misallocation of resources from consumption to investment during "booms", and out of investment during "busts". Krugman argues that because total spending is equal to total income in an economy, the theory implies that the reallocation of resources during "busts" would increase employment in consumption industries, whereas in reality, spending declines in all sectors of an economy during recessions. He also argues that according to the theory the initial "booms" would also cause resource reallocation, which implies an increase in unemployment during booms as well.^[26] In response, Austrian economist David Gordon argues that Krugman's argument is dependent on a misrepresentation of the theory. He furthermore argues that prices on consumption goods may go up as a result of the investment bust, which could mean that the amount spent on consumption could increase even though the quantity of goods consumed has not.^[114] Many Austrians also argue that capital allocated to investment goods cannot be quickly augmented to create consumption goods.^[115]

Economist Jeffery Hummel is critical of Hayek's explanation of labor asymmetry in booms and busts. He argues that Hayek makes peculiar assumptions about demand curves for labor in his explanation of how a decrease in investment spending creates unemployment. He also argues that the labor asymmetry can be explained in terms of a change in real wages, but this explanation fails to explain the business cycle in terms of resource allocation.^[116]

Hummel also argues that the Austrian explanation of the business cycle fails on empirical grounds. In particular, he notes that investment spending remained positive in all recessions where there are data, except for the Great Depression. He argues that this casts doubt on the notion that recessions are caused by a reallocation of resources from industrial production to consumption, since he argues that the Austrian business cycle theory implies that net investment should be below zero during recessions.^[116] In response, Austrian economist Walter Block argues that the misallocation during booms does not preclude the possibility of demand increasing overall.^[117]

Critics have also argued that, as the Austrian business cycle theory points to the actions of fractional-reserve banks and central banks to explain the business cycles, it fails to explain the severity of business cycles before the establishment of the Federal Reserve in 1913.^[32] Supporters of the Austrian business cycle theory respond that the theory applies to the expansion of the money supply, not necessarily an expansion done by a central bank.^[118] Historian Thomas Woods argues that the crashes were caused by various privately-owned banks with state charters that issued paper money, supposedly convertible to gold, in amounts greatly exceeding their gold reserves.^[119]

In 1969, economist Milton Friedman, after examining the history of business cycles in the U.S., concluded that "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."^[24] He analyzed the issue using newer data in 1993, and again reached the same conclusion.^[25] Austrian economist Jesus Huerta de Soto argued that Friedman's conclusions are based on misleading data (such as GDP).^[120] Austrian economist Roger Garrison argued that Friedman was misinterpreted economic aggregates and in what way they connected to the business cycles he reviewed.^[121]

Government spending[link]

Jeffrey Sachs argues that among developed countries, those with high rates of taxation and high social welfare spending perform better on most measures of economic performance compared to countries with low rates of taxation and low social outlays. He concludes that Friedrich Hayek was wrong to argue that high levels of government spending harms an economy, and "a generous social-welfare state is not a road to serfdom but rather to fairness, economic equality and international competitiveness."^[122] Austrian economist Sudha Shenoy responded by arguing that countries with large public sectors have grown more slowly.^[123]

Principal works[link]

• Capital and Interest by Eugen von Böhm-Bawerk
• Individualism and Economic Order by Friedrich Hayek
• Principles of Economics by Carl Menger
• Human Action by Ludwig von Mises
• Man, Economy, and State by Murray N. Rothbard

See also[link]

Economics portal

• List of Austrian School economists
• List of Austrian intellectual traditions
• Perspectives on capitalism
• Quarterly Journal of Austrian Economics

Footnotes[link]

References[link]

• Harald Hagemann, Tamotsu Nishizawa, and Yukihiro Ikeda, eds. Austrian Economics in Transition: From Carl Menger to Friedrich Hayek (Palgrave Macmillan; 2010) 339 pages
• Stephen Littlechild, ed. (1990). Austrian economics, 3 v. Edward Elgar. Description and scroll to chapter preview links for v. 1.

External links[link]

Wikimedia Commons has media related to: Austrian School

• Austrian School at the Open Directory Project
• Austrian Economics Concise encyclopedia of economics on Econlib
• The Austrian School from the History of Economic Thought website.
• Austrian School at Mises Wiki
• Introduction to Austrian Economics, an online lecture series from the Foundation for Economic Education
• A Primer on Austrian Economics by Jonathan M. Finegold Catalan, June 2010

Peter Schiff

Austrian School
Born	(1963-03-23) March 23, 1963 (age 49)
Nationality	United States
Field	Financial Economics
Alma mater	U.C. Berkeley (B.B.A.), 1987[1]
Opposed	John Maynard Keynes,[2] Alan Greenspan,[3][4][5] Ben Bernanke,[6][7][8] Paul Krugman,[9] Christopher Dodd,[10] Barack Obama,[11]
Influences	Irwin Schiff, Ludwig von Mises, F.A. Hayek, Murray Rothbard

Peter David Schiff (pronounced /ˈʃɪf/; born March 23, 1963) is an American businessman, investment broker, author and financial commentator. Schiff is CEO and chief global strategist^[1] of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut^[12] and CEO of Euro Pacific Precious Metals, LLC, a gold and silver dealer based in New York City.^[13]

Schiff frequently appears as a guest on financial television and is often quoted in major financial publications. He is host of The Peter Schiff Show, a radio show broadcast on terrestrial and internet radio. He is a frequent guest on internet radio^[14][15][16] as well as the host of the former podcast Wall Street Unspun.^[14][17] In 2010 Schiff ran as a candidate in the Republican primary for the United States Senate seat from Connecticut.^[18]

Schiff is known for his bearish views on the dollar and dollar denominated assets, while bullish on investment in tangible assets as well as foreign stocks and currencies.

Early life and education[link]

Peter Schiff was born and raised in New Haven, Connecticut. His father, Irwin Schiff, is a prominent figure in the U.S. tax protester movement, currently serving a 13-year sentence for tax evasion.^[19] Peter Schiff attended Beverly Hills High School in California,^[20] and graduated from the University of California, Berkeley in 1987 with a Bachelor's degree in finance and accounting.^[1]

Financial career[link]

Schiff began his career as a financial consultant at a Shearson Lehman Brothers brokerage.^[1] In 1996 Schiff and a partner acquired a small brokerage firm that had been founded in 1980, reincorporated it in California and renamed it Euro Pacific Capital.^[21][22] The company today has more than 15,000 clients^{[citation needed]} and six offices nationwide, with its headquarters in Westport, Connecticut.^[12][21][23]

According to a 2005 article in The Advocate of Stamford, Connecticut Schiff relocated the firm to Darien, Connecticut to find brokers "who think like him". The New York Metropolitan Area, Schiff says, has the biggest concentration of brokers in the country, making it easier to recruit employees.^[24] The company has offices in Newport Beach, California as well as in Scottsdale, Arizona, Palm Beach, Florida, Los Angeles and New York City. Euro Pacific Capital also holds the exclusive rights to broker some Perth Mint gold products in the United States.^[25]

Economic forecasts[link]

Peter Schiff voices strong support for the Austrian School of economic thought, first introduced to him by his father.^{[26][27][28][29]}

2002–2008[link]

In his 2007 book Crash Proof, Schiff wrote that United States economic policies were fundamentally unsound, and predicted that the United States dollar would lose much of its value.^[3] Schiff believed that the imbalance between the amount of goods the U.S. consumed and what it produced would eventually lead to problems for the U.S. economy.^[30][31] As a remedy Schiff favored increased personal savings and production which he said would stimulate economic growth.^[32] Schiff cited the U.S.'s low personal savings rate as one of the causes of its transformation from the world's largest creditor nation in the 1970s to the largest debtor nation in the year 2000.^[33] Schiff attributed the low savings rate to higher inflation and the artificially low interest rates set by the Federal Reserve.^[34]

In a May 2002 interview with Southland Today, Schiff predicted that the economic downturn triggered by the bursting of the dot-com stock market bubble, an event that he had also forecast well in advance, would lead to a bear market likely to last "another 5 to 10 years."^[35][36] Later that year, following a 30% decline in the Dow Jones, Schiff reversed his call, and became bullish on U.S. stocks in nominal terms. However, he remained bearish in gold terms. In November 2002, as Schiff predicted, US stock indexes began a nominal bull market uptrend that held steady for five years,^[37] until reversing course in 2008, when they began a decline to less than half of their peak 2008 values,^[38] followed in 2009 by the Dow climbing 61% from its low point over the following year.^[39] However, priced in gold, U.S. stocks remained in a bear market the entire time. In May of 2002, the date of the Southland Today interview,^[40] the Dow Jones was worth over 34 ounces of gold. By 2011 the Dow fell below 6 ounces of gold, a nine-year decline of over 80%, in line with Schiff’s 2002 forecast.^[41]

In an August 2006 interview he said: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."^[42] On December 31, 2006 in debate on Fox News, Schiff forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth".^[42]

As part of these exchanges on Fox News and his repeated appearances on financial news network CNBC, Schiff had mentioned factors such as speculators and "the absence of lending standards" which are now seen by many^[43][44] to indeed be contributing factors to the housing crisis which began in 2007. On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry.^[45] Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."^[46]

Since 2007, Schiff has stated many times that if the government doesn't change course there will be hyperinflation in the US.^[3] Schiff is one of a minority of economists credited with accurately predicting the financial crisis of 2007–2010 while "nearly all [macroeconomists] failed to foresee the recession despite plenty of warning signs".^[47][48] In his book Crash Proof, he described several aspects of the U.S. economy that would lead to a recession.^[3]

A YouTube video entitled "Peter Schiff was right" became popular in late 2008 and 2009.^[49][50] The video consists of a compilation of clips of his many appearances on various financial news programs from networks including CNBC, Fox News, MSNBC and Bloomberg, most of which took place from 2005 to 2007. In the video segments Schiff explains the fundamental problems he saw with the United States economy at that time. Schiff's warnings of a coming economic collapse earned him the moniker "Dr. Doom."^[22][51][52]

2009–present[link]

Despite predictions regarding the housing bubble and automotive industry difficulties coming to fruition, as early as 2009 Schiff was receiving criticism due to the performance of some of his client's accounts in 2008, as well as controversies over the predictions themselves. In January 2009, economic blogger and investment adviser Michael Shedlock reported, "I have talked with many who claim they have invested with Schiff and are down anywhere from 40% to 70% in 2008."^[53] Later that week an article appeared in the Wall Street Journal reporting that Schiff's broker-dealer firm, Euro Pacific Capital Inc., "advised its clients to bet that the dollar would weaken significantly and that foreign stocks would outpace their U.S. peers" and that instead, the dollar advanced against most currencies, "magnifying the losses from foreign stocks Mr. Schiff steered his investors into."^[54]

The Director of Communications at Schiff's investment firm responded to the original Shedlock piece by saying, "While it is true, that our accounts have suffered badly in 2008, a fact that we have never disputed or ran from, [Shedlock's] estimates for the size of our typical client losses are exaggerated and unfair."^[55][56] Schiff personally responded to Shedlock's criticism by saying, "to examine the effectiveness of my investment strategy immediately following a major correction by looking only at those accounts who adopted the strategy at the previous peak is unfair and distortive" and called Shedlock's blog entry "nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career," adding that losses were felt mostly by recent clients and not by others.^[57]

Schiff responded similarly to criticisms made by Wade Slome of Sidoxia Capital Management, LLC. in a September 2009 blog entry entitled, "The Emperor Schiff Has No Clothes."^[36] Schiff stated not only were the losses suffered by his clients in 2008 highly exaggerated, but also that most of those losses have already been recouped, stating that many who were down then are now up, and most long-term clients were never down at all, but merely temporarily lost some of the profits they had earned over the years.^[36]

The January 2009 Wall Street Journal article discussed the value of Schiff's predictions, and stated how deficiencies "made mincemeat of investors who took his advice in 2008."^[54] In an interview the following week Schiff likened himself to billionaire investor Warren Buffett, saying they were both "buy and hold" long-term investors. Contrasting his negative press he compared claims about accounts managed under Schiff's firm to the stock market value of Buffett's company, saying: "His approach is you buy stocks and you never sell them—you hope to never sell them—and Berkshire Hathaway is down 40% in the last thirteen months; I don't see the Wall Street Journal saying 'Warren Buffett made mincemeat out of his clients.'"^[58] The Wall Street Journal also published a letter written by Schiff in response to his critics saying: "My central investing premise, a weakening dollar and safety in gold, commodities and foreign stocks, didn't materialize in 2008. But all the ingredients were (and remain) present for those movements to occur. Over the past year, market reactions that I didn't foresee—massive global deleveraging, a knee-jerk 'flight to quality' into U.S. Treasuries and a sharp counter trend rally in the U.S. dollar—have kept the scenario from playing out."^[59]

In a November 2009 videoblog, Schiff said that five stocks he picked for Fortune Magazine in January 2009 had gained a total of 360%.^[60][61]

In a March 2009 speech Schiff said that it would be impossible for the U.S. debt to China to be repaid unless the U.S. dollar's value is substantially diluted through inflation. In September 2009 Schiff said that "I would not be surprised to see [gold] at $5,000 over the next several years" and that the 2009 stock market rally was a "bear market rally".^[62]

According to economist Paul Krugman, Schiff's Austrian approach to economics led him to incorrectly predict hyperinflation in the United States.^[63]

Political career[link]

Schiff was an economic adviser to Ron Paul's 2008 presidential campaign. In support of Paul's economic revitalization plan, he said: "We need a plan that stimulates savings and production, not more of the reckless borrowing and consumption that got us into this mess in the first place. Ron Paul's plan is the only one that amounts to a step in the right direction. If you want meaningful change—for the better that is—Ron Paul is the only candidate capable of delivering it."^[64]

In 2008, Schiff also endorsed Murray Sabrin for the U.S. Senate seat in New Jersey.^[65]

In an interview in February 2009, Schiff's position was summarized as a nonpartisan critique of American policymakers, comparing former presidents George W. Bush to Herbert Hoover and President Barack Obama to former president Franklin D. Roosevelt, with neither of the more recent incumbents comparing favorably to the earlier ones.^[66]

Schiff supports the reduction of government economic regulation, and is concerned that President Obama's administration may increase such regulation.^[67] Schiff says that the economic crisis of the late-2000s provides an opportunity to transition from borrowing and spending, to saving and producing. He is critical of the U.S. government's efforts to "ease the pain" with economic stimulus packages and bailouts. According to Schiff, the U.S. government's approach of replacing "legitimate savings with a printing press" could result in hyperinflation.^[68]

2010 U.S. Senate campaign[link]

In December 2008, Connecticut citizens created a website encouraging Schiff to campaign against the incumbent Senator Christopher Dodd.^[69][70] Approximately 5,000 people made campaign contributions using the web site.^[69] On February 21, 2009, a moneybomb raised over $20,000 for Schiff's campaign.^[71] In a May 2009 video blog, Schiff said that he was seriously considering a run for the senate and when questioned by a Washington Post reporter, he said the chance of him entering politics was "better than 50-50".^[72] In June 2009 Schiff commissioned a poll of likely voters which indicated that he trailed Dodd in popularity by four percentage points.^[73] On July 9, 2009, Schiff launched an exploratory committee and an official campaign website.^[69] He began accepting donations in an attempt to see if "people who really believe in freedom, liberty, sound money and the constitution are prepared to support that with an actual political contribution or to volunteer their services and work on this campaign." He received over 10,000 donations and many e-mails from around the world.^[69]

After giving some hints on The Daily Show^[74] Schiff officially announced his candidacy for the Republican nomination on September 17, 2009, during the MSNBC Morning Joe show.^[18][75][76] By October 2009 Schiff had received more than 10,000 telephone calls and letters^[69] and raised over $1,960,000 (USD) in campaign contributions.

At the May 2010 Republican convention, Linda McMahon received the most delegate votes but not enough to prevent an August primary election. U.S. Rep. Rob Simmons received more than the required 15 percent of the total votes necessary to force the primary. Schiff then collected the signatures necessary to earn a position on the August 2010 GOP primary ballot, submitting at least 400 signatures over the state requirement.

In July 2010, Schiff's campaign received endorsements from Steve Forbes and Ron Paul.^[77][78]

In the Republican primary, held on August 10, 2010, Schiff lost the nomination to Linda McMahon.^[79] McMahon collected 49% of the vote, with Simmons on 28% and Schiff 23%.^[80]

Ultimately, the election was won by the Democratic Party primary winner, Richard Blumenthal.^[81]

Broadcasting[link]

From 2005 to 2010 Schiff hosted a weekly podcast named Wall Street Unspun. In October 2010 Schiff began hosting a new radio show named The Peter Schiff Show. The show is broadcast weekdays from 10am-noon ET on internet and terrestrial radio. The show has featured guests such as Ron Paul, Rand Paul, Niall Ferguson, Dennis Kucinich, Rick Santelli, and others.^[82]