Dr. Kurt Richebächer R.I.P.

One more hero falls.

Dr. Kurt Richebächer’s, who died on Monday, has writen about the economy before I was aware of him when I became a stockbroker in 1968. Even after I retired, I read his frequent writings about the economy and always learned from him and he reinforced my views. He practiced the tenets of the Austrian School of economics. The Vigilant Investor has some nice words about the man.

Some say in government that “we didn’t see this turmoil in the mortgage industry coming.” Richenbacher in December of 2006 wrote about MONETARY ANARCHY and warned of the consequences of the credit expansion:

It (the housing boom) was a boom that plainly went to extraordinary excess in various ways. As a rule, this suggests a very severe aftermath of painful corrections. The first effects of the housing bust have definitely been bigger and more abrupt than most experts had expected. Yet hopes are riding high for a benign adjustment. To quote Federal Reserve Vice Chairman Donald L. Kohn from a recent speech: “The economy will grow at a moderate pace for a while, somewhat below the rate of increase of its potential, and then growth will begin to strengthen.”


Mr. Kohn also takes comfort from the fact that the present housing downturn, in sharp contrast to past ones, is not caused by credit tightening. As he rightly stresses, “The Federal Reserve has returned short-term interest rates only to more normal levels and long-term rates are unusually low relative to those short-term rates.” We think, though, that he is drawing a totally false conclusion. All downturns caused by tight money were followed by vigorous recoveries. A downturn happening despite low interest rates and loose money seems to us the most worrying kind.

I grew up on Ayn Rand, Ludwig von Mises and the Austrian School of economics and Richenbacher to name a few. That is why the words of Ron Paul are so appealing to me.

Dr. Kurt Richebächer Austrian School of economics Ron Paul Mover Mike

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