I also believe that some of the Austrians, when they predicted near-instant hyperinflation, should have known better. An expansion in the monetary base can lead to what Milton Friedman called the "pushing on a string" effect, as an expansion of bank reserves will not increase the amount of money in circulation (at least not significantly) if businesses and individuals are not borrowing.
As Murray Rothbard points out in his book, America's Great Depression, the amount of money in circulation during the 1920s grew, and he terms that as "inflation." However, according to the Consumer Price Index of that time, consumer prices fell by roughly one percent a year, which the late Jude Wanniski used as "proof" that Rothbard was wrong when he claimed that the 20s was an inflationary period. What we witnessed was an apples-and-oranges kind of comparison, as most people (including most economists) generally are used to defining inflation as an increase in the government's CPI, but the Austrians would say that changes in the CPI would be the result of inflation and in our case, the result of the monetary policies of the Fed.
This point is vital, for the Austrians hold in their business cycle theory that when the central bank manipulates the banking system to increase the amount of money in circulation, the larger effect is not in consumer price changes but rather the fact that relative values of real goods are changed in a way that directs longer-term investment into lines of production that would seem to be profitable but over time turn out not to be. We certainly saw that in the housing boom and in the tech boom a decade earlier. Investments were directed into production lines that could not be sustained, given the preferences of consumers and their own financial constraints.
Austrians .. look for the cause-and-effect. Carl Menger, the original Austrian Economist, begins his classic 1871 Principles of Economics with: "ALL THINGS ARE SUBJECT to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary." Why the "irrational exuberance?" Krugman holds to the Keynesian line of "animal spirits" of investors, but that is no cause at all ..
..The Fed has vastly increased its balance sheet and has been spreading dollars around the world, mostly to purchase "assets" that essentially have little or no value so that the holders of those assets do not have to take the necessary financial bath. Such actions would not necessarily result in a huge increases of consumer prices overall, but they would have the effect of directing real investment away from those lines of production that would be both profitable and sustainable. Whether it is protecting the banks or the "green investors" or governments that have spent themselves into financial oblivion, the Fed has stymied the recovery by forcing assets into production areas that are doomed to failure. The result is what we see around is in the anemic economic growth.