As an ardent supporter of Ron Paul, I must acknowledge Paul Krugman's point about getting inflation wrong, at least in the years since the crash. He is right that there were many outspoken critics of monetary expansion at the time, including Paul and Schiff, who predicted massive inflation around the corner. But there are two further points to be made about Austrian Economics in general.First, there were at the time and continue to be Austrians who correctly anticipated the strong deflationary pressures we actually ended up facing. Mike Shedlock, for example, is concerned much more with contracting aggregate credit than expanding monetary base.Second, Austrians are unanimous on a much bigger point: that we are still in the middle of this crisis. We reject any suggestion that a recovery is underway or that any underlying structural problems have actually been resolved. As such, we have yet to confront the worst consequences of the crisis and once we do, some of the outcomes Paul and Schiff predict could come into play.Austrians also agree that while the monetary expansion may not have yet caused massive inflation, it has managed to keep incumbent banks in power. Money printing is thus seen as maintaining the status quo. Rather than the mighty banks falling and being replaced by smaller, fairer banks, they remain entrenched. This populist angst towards money printing - as a tool of the establishment - currently holds more sway than concern about rampant inflation.
