The insights of the Austrian School of Economics will prove invaluable to investors navigating the distorted global economy of 2021.

This 18-tweet thread walks you through the definitive guide "Austrian School for Investors" by @scholarium_at, @RonStoeferle and @MarkValek.👇

1/ The roots of the Austrian School can be traced back to its founder Carl Menger, whose 1871 book Principles of Economics provided a new foundation for economic theory and solved the age-old "Paradox of Value".

From Menger's work we can derive 4 pillars of Austrian Investing.

2/ 1: The Subjective Theory of Value recognises that value is not determined by any inherent property of a good, nor by the amount of labor necessary to produce it, but by the importance an acting individual places on it for the achievement of their desired ends.

3/ 2: The Law of Diminishing Marginal Utility recognises that as more units of a homogenous good are acquired, the utility derived from each additional unit declines.

This wide-ranging insight helps explain important economic phenomena such as the historical emergence of money.

4/ 3: Methodological Individualism is the principle that economic phenomena result from the actions of individuals.

Collective magnitudes like “the people” cannot act, & therefore cannot be treated as ultimate causes.

Austrians are cautious in their use of economic aggregates.