Austrian Economics

Austrian Economics is a branch of economics that emphasizes the importance of individual choices and actions, the role of entrepreneurship, and the limitations of government intervention. It focuses on how human behavior influences the economy, using deductive logic rather than mathematical models. Austrian Economics was founded by Carl Menger, an Austrian economist, in the late 19th century. His book, “Principles of Economics,” laid the foundation for this school of thought.

One of the first ideas that Austrian economics theorists came up with was the idea of diminishing marginal utility. One way they explained this concept was through an example of a poor and rich man. To a homeless person, an additional dollar may be very important, but a billionaire may place less meaning on an extra dollar added to their wealth.

Austrian economics generally advocates for free markets, financial sovereignty, minimal government intervention, and criticizes fiat currency, preferring sound money. Bitcoin exhibits these principles by offering a decentralized, limited-supply money that operates outside government control, aligning with the Austrian economics’ emphasis on sound money and financial independence. Austrian Economics emphasizes individual choices and free markets, while Keynesian Economics focuses on government intervention and fiscal policies to manage economic cycles.

Austrian economic principles generally argue that government intervention and fiat currency lead to inefficiency and inflation, undermining long-term economic growth. In contrast to Keynesian economics, it sees free markets as self-regulatory and government intervention as harmful.