Wisdom of the ages

By popular demand, find attached the full interview with Peter Jonson (AKA Henry Thornton), former chief economist at the RBA on where we’ve all gone horribly wrong. I also recommend the book mentioned in the video, Great Crises of Capitalism.

Houses and Holes
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  1. Many thanks H&H for your very valued and highly informative blog/links.

    It is greatly appreciated by all.


  2. Thanks. Peter Jonson is refreshingly straightforward and deserves as wide an audience as possible.

    Obama would likely benefit from a hour or two with him as well.

  3. I doubt that Peter Jonson has read Henry Thornton. Not my words, but Gerard Jackson who takes a very dim view of Jonson and his ilk.

    Prefer “Austrian capital theory explains that in recession it is the higher stages of production that suffer the most. What is being called two-speed economy is reality an economy that appears to be slowing down significantly. Ordinarily, this would clearly include the mining. However, in the case of Australia a great deal of mining has — for a time — become integrated into the Chinese economy. Therefore, once China’s boom comes to an end our mining industry will contract. In other words, what might be called the “high-speed” part of our economy is in fact part of the Chinese economy.”


    Needless to say that Gerard has a very dim view of Jonson’s views.

    “(The idea that growth generates inflation is an appalling fallacy that seems to be held by the majority of economists these days. Peter Jonson, aka Henry Thornton, is another economy commentator who thinks that “when growth exceeds predictions, you get inflation”. None of these economists understand that it’s when investment exceeds savings that inflation emerges.”


    I think I read too much!

    • Good on you Whacked. I’ve been reading Gerry for years. Rounded perspectives and two sides of every coin, with Gerry providing the otherside.
      Gerry has called out Thornton on many occasions, especially in relation to the original Thornton.

      Gerry has been a stalwart for many years. Hes’ often vitriolic and throws the kitchen knives, but extemely valuable, especially the Austrian perspective on Australia.

    • I’ve enjoyed the Henry Thornton column for years – as I did the interview linked here. I’d not heard of Gerard Jackson, clearly of person of strong opinion (knife thrower indeed!), found some of what he said appealing (carbon tax, Combet, critique of the media – because it aligned with my personal view) – the vitriol had less appeal.

      Jonson is like a invigorating breeze and Jackson a hurricane. Mostly we want the former, occasionally the latter – being good for clearing dead wood.

      I’ll read more Jackson – and hope to see more Jonson at MB…the RBA…Treasury…Julia’s place…Capitol Hill…

    • I know that a lot of vitriol is thrown by Gerard. I am not making any excuses for him but he definitely does not suffer fools.

      It is obvious in Oz, that the so called economists and those so called economic journalists rely heavily on Freidman and Keynes yet know little about the basics of economics, they appear to not understand the situation as well as what Gerard does. Whether this be by design or otherwise. He has a highly classical bent and is not afraid to call anyone out over ‘crap’ analysis and decisions.

      Left Keen well alone though …

  4. michael francis

    They all talk about our miniscule Government debt but not a mention of our ballooning household debt.

  5. That guy shouldn’t confuse not accumulating more debt as “paying down debt”.

    Debt exhaustion is quite different.

  6. The trouble with the long historical view, even when very well done, is that it relies on assuming that nothing fundamentally new is happening. Usually, it is a fair assumption. But not in this era of meta-money. Question: what is “money supply” when we have $4 trillion flowing across borders every day, far outweighing QE? I think the system itself is subject to recklessness, not just the wrong headed strategies from within the system that are well analysed here. The situation is much more dangerous than is realised, it seems to me.