Austrian economics interprets corporate cash hoarding in recessions as rational fear of state expropriation

Evidence

According to the Austrians, then, we should not be surprised to find lots of companies sitting on very large piles of cash in the middle of a recession. Per contra what stimulators would tell you about this behavior being a response to uncertainty about the future or a lack of demand, what’s really behind it is the perfectly rational belief that given half a chance the government will inflate or devalue its way out of trouble on the backs of the investor class. Companies may be sitting on piles of cash and not investing, but the recession is not, as Keynes would have you believe, the capitalists’ fault. Rather, investors are quite reasonably covering the risk of backdoor expropriation by the state through inflation or devaluation. The fear of the state taking away your property—the original liberal nightmare—rears its head once more. Instead, “public opinion is perfectly right to see the crisis … as a consequence of the policy of the banks.” Consequently, the sum of the Austrian view is that we should let the banks fail and then restart the system. — Mark Blyth, Austerity, 395

Categorization

• XREF: This is the core Austrian framing that contrasts with Keynesian demand-side explanations; connects directly to the foundational austerity-intellectual-history project and to Mattei’s account of fiscal policy orthodoxy. — connects to: German anti-stimulus stance stems from a belief that government policy failures cause crises — Mark Blyth, Austerity: The History of a Dangerous…, 166; Savings do not necessarily produce investment and can instead produce hoarding — Mark Blyth, Austerity: The History of a Dangerous…, 342; Austrian theory holds that government intervention, not markets, causes boom-bust cycles — Mark Blyth, Austerity: The History of a Dangerous…, 316 (+3 more)

Broader Connections

• Monetarism mainstreamed Austrian and ordoliberal economic ideas #expands (0.85) — Mark Blyth, Austerity, 412
• Austrian business-cycle theory correctly describes asset bubble dynamics but offers no policy #expands (0.75) — Mark Blyth, Austerity, 398