Chatting Austrian
Artificial Intelligence is not a new concept in computer science. It goes back to the earliest days of digital computing. There have been multiple generations of ‘AI’ as it is frequently called. None of these amounted to anything but losses. The microprocessors were too slow, the memory too small and disk space so limited it bordered on useless. Things have changed dramatically with the advent of cloud computing which is based on low cost 64 bit Intel, AMD, and Arm CPU’s using very large disk arrays in the cloud thanks to very cheap terabyte disks and high performance graphic processing units (GPU) from Nvidia; now one of the most valuable companies in the world. None of this required the government. It is a perfect case of private capital serving the free market. It seems to be ubiquitous now; loved by the IT community for the incredible tools now available and cursed by those who think it will take everyone’s job away, enslave humanity and perhaps launch a thermonuclear war ala the Terminator.
Sadly for the venture capital crowd it is still a money losing sinkhole with the sunk costs now in the tens of billions instead of the old days when it failed losing only millions. The biggest names are OpenAI, xAI, Google Gemini, Perplexity, Hugging Face and Microsoft Copilot (based on OpenAI) all that produce nothing but red ink.
ChatGPT is my new best friend. We ‘chat’ almost every day and it is free. A chat at its simplest is question and response. You can run ChatGPT from a web browser, a program on your PC, Mac or Android desktop computer. It also has an application for the iPhone and Android smart phones. If you pay $20 a month you get expanded capabilities but even these are mainly free for some part of every day. It understands many languages including computer programming languages. Thanks to the vast amount of data available on the Internet the dialogs can be very interesting.
I love to discuss Austrian Economic Theory with ChatGPT. It understands it at the most profound level something mainstream economists, government leaders including our elected leaders either do not or refuse to. In a quick dialect it shows clearly the Austrian way to peace and freedom. Here’s a short dialog I had today with ChatGPT illuminating this. My questions will be in fixed width Courier font which is what teletype terminals used for decades!
Question: briefly explain Austrian Economic Theory.
Austrian economic theory emphasizes individual action, subjective value, and free markets. It rejects mathematical modeling and central planning, focusing instead on how individuals make decisions based on personal preferences and limited information.
Key principles include:
- Methodological individualism: All economic phenomena arise from individual choices.
- Subjective theory of value: Value is determined by individual preferences, not labor or intrinsic properties.
- Marginalism: Economic decisions are made at the margin—what matters is the next unit of a good or service.
- Spontaneous order: Markets self-organize through voluntary exchange without central direction.
- Business cycle theory: Credit expansion by central banks distorts interest rates, causing booms and inevitable busts (Mises-Hayek theory).
Austrian economists generally oppose government intervention, arguing it disrupts the natural coordination of market forces.
Would you like a contrast with Keynesian or Chicago school economics?
Question. No. Explain currency?
In Austrian economics, currency (money) is viewed as a market-originating tool, not something that should be created or managed by governments. Key views include:
- Sound money: Austrians strongly support commodity-backed money (like gold or silver), believing it limits inflation and government overreach.
- Against fiat currency: They argue fiat money—created by central banks without commodity backing—leads to inflation, asset bubbles, and economic distortions.
- No central banking: They advocate for free banking, where banks issue their own currencies backed by real assets, competing in the market.
- Money as a medium of exchange: Austrians see money as a neutral medium that emerges spontaneously from trade, not as a tool for macroeconomic policy.
Ludwig von Mises and Murray Rothbard were especially vocal about the dangers of inflationary fiat currency and central banking (e.g., the Federal Reserve).
Would you like a deeper dive into their critique of central banks?
Question: yes.
Austrian economists offer a fundamental critique of central banks, especially the Federal Reserve, rooted in the belief that centralized control of money leads to economic instability, distortion of prices, and erosion of individual liberty. Here’s a concise breakdown:
Key Austrian Critiques of Central Banks
- Distortion of Interest Rates
- Central banks artificially lower interest rates via monetary expansion.
- Austrians argue interest rates should emerge from real savings and time preference.
- Artificially low rates mislead entrepreneurs, triggering malinvestment (bad investments) during the boom phase of the Austrian
Article from LewRockwell
LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
