http://consultingbyrpm.com/blog/2008/12/hayek-tells-bill-buckley-that-even-keynes-was-afraid-of-the-keynesians.html The personal blog of economist RPM Wed, 08 Feb 2012 19:34:56 +0000 hourly 1 http://consultingbyrpm.com/blog/2008/12/hayek-tells-bill-buckley-that-even-keynes-was-afraid-of-the-keynesians.html#comment-5392 Will Sun, 05 Sep 2010 02:16:00 +0000 http://consultingrpm.fatcow.com/?p=393#comment-5392 I think a better way to phrase Hayek's point would be to say that when Churchill tied Sterling back to gold in 1924 at the prewar parity (after the huge expansion of the £ money supply in WW1 having caused each unit of " to be worth far less in terms of gold) each note was consequently overvalued relative to gold and therefore forex exchanges with gold converting into Sterling currency at the official Bank of England rate cost an excessive amount making British prices too high in gold as they were pumped up by consistent expansion of Sterling media <i> even after </i> the return to gold backing at the prewar parity thus preventing the appreciation of the pound that was necessary unless the BoE would stop passing off new bank notes as backed by gold while fixing the price of Sterling to gold. This of course caused a shortage of foreign gold inflows and consequently awful exports, and this is used as a really pathetic strawman argument against gold as Mises points out while discussing this egregious episode in his introduction to the third volume of The Theory of Money and Credit. As it is transcribed here and explained by Hayek it is simply not correct; if prices had been falling and if Trade Union force had been combated (Keynes' argument being that it could not be combated) then British real wages would have fell to purchaseable levels because the costs of exporting from Britain would have been lowered but alas, the money media was not shrinking in supply and was exchanged for gold at an officially overvalued rate, which is the problem of a Gold Exchange Standard as opposed to printing notes ONLY when they represent a saved portion of gold so that all money is either gold or a certificate for gold that is simply left elsewhere, and which can be claimed by receipt of the note. Though such a system relies on gold bankers not printing notes without receiving new specie. It's basically a fairytale system upheld by government, in a truly free market no-one would use many certificates for deposited precious metals! I think a better way to phrase Hayek’s point would be to say that when Churchill tied Sterling back to gold in 1924 at the prewar parity (after the huge expansion of the £ money supply in WW1 having caused each unit of ” to be worth far less in terms of gold) each note was consequently overvalued relative to gold and therefore forex exchanges with gold converting into Sterling currency at the official Bank of England rate cost an excessive amount making British prices too high in gold as they were pumped up by consistent expansion of Sterling media even after the return to gold backing at the prewar parity thus preventing the appreciation of the pound that was necessary unless the BoE would stop passing off new bank notes as backed by gold while fixing the price of Sterling to gold. This of course caused a shortage of foreign gold inflows and consequently awful exports, and this is used as a really pathetic strawman argument against gold as Mises points out while discussing this egregious episode in his introduction to the third volume of The Theory of Money and Credit. As it is transcribed here and explained by Hayek it is simply not correct; if prices had been falling and if Trade Union force had been combated (Keynes’ argument being that it could not be combated) then British real wages would have fell to purchaseable levels because the costs of exporting from Britain would have been lowered but alas, the money media was not shrinking in supply and was exchanged for gold at an officially overvalued rate, which is the problem of a Gold Exchange Standard as opposed to printing notes ONLY when they represent a saved portion of gold so that all money is either gold or a certificate for gold that is simply left elsewhere, and which can be claimed by receipt of the note. Though such a system relies on gold bankers not printing notes without receiving new specie. It’s basically a fairytale system upheld by government, in a truly free market no-one would use many certificates for deposited precious metals!

]]> http://consultingbyrpm.com/blog/2008/12/hayek-tells-bill-buckley-that-even-keynes-was-afraid-of-the-keynesians.html#comment-2076 Greg Ransom Sun, 06 Jun 2010 02:55:58 +0000 http://consultingrpm.fatcow.com/?p=393#comment-2076 What happened to the mp3 clip of Hayek & Buckley? What happened to the mp3 clip of Hayek & Buckley?

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