De Gaulle is speaking, but the words are Jacque Rueff’s. Makes me think of Keynes, who said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”… mind you Rueff at the time was not a defunct economist.
Can you clarify what you mean, JP? De Gaulle was reading a speech literally written by JR? Or De Gaulle’s thinking on this was heavily influenced by JR?
Dear Dr. Murphy,
Certainly Charles de Gaulle made his own thinking, but he was clearly in the same line as Jacques Rueff, who served twice as chairman, or co-chairman of a commission to analyse financial troubles and make policy recommandations (in 1958), and (the second time) a commission to analyse the obstacles to economic growth (1960). In both case he made bold (classical-liberal) recommandations to de Gaulle.
In Rueff’s “Le péché monétaire de l’occident” where he attacked the gold-exchange standard and argued for a return of a real gold standard, he included as chapter IV (with explicit permission from the Général) de Gaulle’s press conference. (Ironically, the part of the book in question is titled “Essais de persuasion”).
In his autobiography, “De l’aube au crépuscule”, Rueff has a chapter on the international monetary system, and he explained that at the time of this conference (feb 1965) de Gaulles’s foreign affairs minister, Maurice Couve de Murville, was a former aide of Rueff and in monetary affairs shared largely his views. According to Rueff, Couve de Murville certainly had advised de Gaulle on the diplomatic aspects of the Int’l monerary system. Moreover, in the weeks before the conference, according to Rueff, de Gaulle consulted him from time to time about financial matters. As Rueff wrote : “Plusieurs fois il me consulta sur les aspects financiers des problèmes dont je l’avais entretenu, mais je ne me doutais pas qu’il préparait une déclaration, très directement inspirée de mes vues, qui devait avoir un immense retentissement dans les relations franco-américaines”. (pp. 264-265)
The Mises Institut has the english translation of Le péché available to download (The monetary sin of the West). I thin the Autobiography is also available in english thank to Mr Lehrman.
This video is no prediction of any US economic crisis in the 2000s.
I doubt whether de Gaulle was thinking of the Bretton Woods system causing Americans to go into private debt with his statement “this fact, leads Americam to get into debt…”. He is probably thinking of nothing more than trade deficits.
And he certainly was not thinking of some huge asset bubble and financial crisis in the 2000s.
I think he has exactly the Bretton Woods system in mind. But the problems are really more related to Triffin than any Austrian ideas.
I think there’s a decent case to be made that, while Nixon’s solution bought time, the Triffin problem has at least contributed to the financial instruments that caused the current crisis.
The solution, of course, is not to return to gold. The solution is Keynes’s: something like the bancor that is a non-national standard (as de Gaulle says), but which is more elastic than gold. Bancor’s are a little retro, but SDRs could do.
The solution is neither bancors nor gold nor any other commodity with which is to be imposed on everyone against their will.
The solution for myself, and for others you have never even met, is to let others use whatever money they want and not threaten them with jail or death in order to keep them obedient to your own desired universal money.
“Elastic” is of course codespeak for “I want myself or another special interest group to be able to spend more than what we can earn through trade.”
Maybe bancors, considering where the logic of them came from, should be shoved up the same place that you have your head most of the time anyway.
“The solution for myself, and for others you have never even met, is to let others use whatever money they want and not threaten them”
I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.
““Elastic” is of course codespeak for “I want myself or another special interest group to be able to spend more than what we can earn through trade.”“
You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future (= promissory notes, bills of exchange, etc.).
But of course facts do not get in the way of delusional Austrian fantasy World peddled by M_F and people of his ilk.
Seriously Joe? Surely the claim is that the Austrian description only fits a fantasy world. The phrase ‘fanatasy world’ fits descriptive models *better* than prescriptive ones.
Forget what LK was saying. What Joseph Fetz wwas saying is wrong. You argue Austrian econ *being positive* cannot be charged with applying only to a fantasy world. That’s just silly, a standard objection to descriptions is that they are inaccurate. Id DK claimed that the multiplier were 3000 or that animal spirits are driven by the teams of unicorns in the white house you’d call that fantasy.
That’s just stupid. Austrian economics is describing the real world. The description might be incorrect, but it is being applied to the real world.
You’re just playing word games where you want to say that any description that is false only describes a fantasy world because you incorrectly interpreted King Keynes, and are now trying to save face.
Rothbard’s attempt to say that fractional reserve banking is immoral – which is what we are talking about above – IS a normative/prescriptive ethical judgement.
His moral argument is deeply flawed and his vision of such a libertarian world without FR banking IS a fantasy world that has never existed.
But you attributed this to Austrian economics, which is not the basis of which Rothbard came to that conclusion. In fact, I don’t fully agree with Rothbard on this, but that’s a separate issue.
And, yes, Mises’s praxeological treatise on how economics works is supposedly descriptive .
But it still disputed whether Mises rejected FR banking. I have seen no evidence that he rejected negotiable bills of exchange, negotiable cheques, negotiable promissory notes etc.
You conflated wertfrei Austrian economics, which is not an ethical doctrine, with libertarian arguments which are an ethical doctrine.
You said, in your typical rhetorical questioning style:
“Not a prescriptive world? So Rothbardian, natural rights-based anarcho-capitalism is not normative/prescriptive vision of how the world should be?”
This is incorrect because Austrian economics is not anarcho-capitalism.
Austrian economics is not prescriptive. It explains the logical categories of human action regardless of which specific norms are practiced.
Anarcho-capitalism on the other hand is prescriptive. It sets out rules of what people ought do and ought not do.
Despite what M_F says, such a system allows people to ” spend more than what we can earn through trade.”
Spending in claims to future money is not spending in money, which is what the argument you are responding to entails.
A free market money standard that contains circulation of future claims to money is not the “spending without earning” originally argued.
A trading a future claim to money with B, in exchange for a good, is not spending more than what is earned. It is an exchange of a future claim to money.
The Fed brings about more spending in MONEY than what is earned through production. This is separate from future claims to money.
He has logically contradicted himself, implying that he opposes FR banking or fiduciary media.
No, free market trade of future claims to money is not in opposition to being against spending money that has not been earned (What the Fed does when it conducts OMOs).
I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.
Oh, you must be confused again. I was referring to free market money, not money where banks are protected by monopoly privilege to create legal tender, backed by the force of jail/death of taxation which is demanded by the courts to be paid in that which contains said legal tender.
You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future (= promissory notes, bills of exchange, etc.).
Red herring. That isn’t what the Fed, the institution I am talking about, does when it spends without having produced a damn thing prior.
They don’t create credit when they BUY securities through OMOs.
“I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.”
Here, LK. Let’s compromise. You can use whatever kind of fractional reserve banknotes you want, and I’ll stick to a hard commodity that is not fractionally reserved. Because fractional reserves are fraudulent.
“You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future”
Someone has to have produced, and you will still have to produce. In the final analysis, goods exchange against other goods. This cannot be avoided. You cannot live your life demanding things but never supplying. At least, not unless you are willing to be a mooching bum, and subsist only upon the charity of others.
People can still write IOU notes even when the primary medium of exchange is precious metals. I can write an IOU note for a bar of gold, just as easily as I write an IOU note for two elephants, or $500.
Thus, a gold-based economy retains just as much elasticity as any other from this perspective.
Bob, off topic but Krugman has mentioned the “owe it to ourselves” idea again:
krugman.blogs.nytimes.com
“You could argue that it would have helped to prepay some of our future costs by paying down debt and indeed having the government acquire assets while the demography was favorable – not because this would have directly increased future resources (debt is money we owe to ourselves) but because it would have reduced the need for higher taxes, and hence the distortionary effect of those taxes. And this argument was, indeed, the reason people like me wanted to protect the Social Security lockbox way back when.”
skylien, was it me and you who talked about the OLG stuff yesterday, because I was looking around for my comment and couldn’t remember where, ‘I put it’. If so could you point me in the right direction?
“Major_Freedom, might I ask why you post so many anonymous comments on a website? I’m fine, however, you on the other hand, (I’ve got two), who knows?”
I’ll answer your question AFTER you answer my question first.
What are you talking about, Ken? Clearly you didn’t actually click on the link to see what I was referring to. Hint, there was no description of the world that I was slamming.
Also, is comment-sqashing you regular practice? I mean, that was the point of it, wasn’t it?
Considering what I saw in the comments of that video, I can only conclude that you’re internet alias is either controlled by more than one person, or that you’re one fucked up individual.
You wouldn’t happen to be related to “g4macdad” would you?
Hey man, I don’t know what you’re going through but I sincerely hope you’re OK. I don’t know if there is anything I can do for you, but if you need someone to talk to you can email me at cotterdan321@yahoo.com
Wahat are YOU talkinmg about Dan? Because I am talking about a general proposition Fetz put forth: that ‘fantasy world’ is a meaningless criticism of a descriptive model, like ‘blue’. Yopu cannot indicate you think a descriptive model is wacked by calling it ‘blue’ Fetz says you cannot indicate you think a descriptive model is wacked by calling it ‘a fantasy world’. Look back.
Ken, I know what you’re saying, and I probably could have worded it better, but that was not my argument.
I was responding to the fact that he concluded this from a purely prescriptive argument. IOW, how could that Austrian fantasy world exist in this context if the argument being made is a prescriptive one?
LK then further substantiated my claim by correctly identifying that the argument being put forth was a libertarian one. But he still conflated this with Austrian economics.
Bob, you didn’t happen to see that OLG post that may or may not have been in reply to skylien, did you? It’s not terribly important, but if you know were I should look.
Bob, off topic but Krugman has mentioned the “owe it to ourselves” idea again
This is such a retarded way of thinking. Someone should just say: “Well, if we owe it to ourselves, then we can easily walk away from an obligation to our own selves.” Less government intervention equals more prosperity – after the required and inevitable liquidation of malinvestments, of course.
At any rate, there is no “us”; No one is entitled to the property of others.
LK still does not understand either the NAP or economic calculation but he knows that he cannot allow them to exist or even be defined in plain language without losing the argument. When we make the claim that certain events and results (funny money, inflation, boom/bust0 violate the well known English Common Law concepts of private property, freedom of contract and the various civil and criminal prohibitions against fraud and assault to person and property, LK’s only line of defense is to proclaim that NO SOCIETY HAS EVER EXISTED WHICH SUCCESSFULLY PREVENTED VIOLATIONS OF THOSE INSTITUTIONS. To even examine on a case-by-case basis whether certain actions and their results were under a regime
a) where rights were in fact protected or
b) where rights were violated by criminals or the government
is specious, according to LK, because the so-called perfect Rothbardian world has never existed. What a load of crap. That’s his argument and that is why it is pointless to “debate” him.
Murder, rape and theft are still illegal in Detroit and Chicago despite years and years when there were thousands of those crimes. Nevertheless, it is still possible (and quite simple) to determine if certain results happened when (or because) rights were protected as opposed to when they were violated. That is true even in a situation where the rights were not perfectly respected and enforced all of the time (like in reality).
“When we make the claim that certain events and results (funny money, inflation, boom/bust0 violate the well known English Common Law concepts of private property, “
That is a bizarre statement.
Since any imaginary free market that is not coercing businesses and people would have FR banking and credit instruments and would be perfectly capable of generating inflation, “funny money” (read: credit money), boom/bust cycles, presumably a Rothbardian free market system would violate well known English Common Law concepts of private property as well.
As for why I think the Rothbardianism is wrong, your comments are nothing but a straw man.
The system is wrong because the ethical arguments offered in defence of it are flawed, as are economic arguments, e.g.,
” any imaginary free market that is not coercing businesses and people would have FR banking”
I must have missed the part where creating fraudulent property titles and loaning them out is part of a “free market”. Are fractional reserve granaries part of the free market, too?
Since any imaginary free market that is not coercing businesses and people would have FR banking and credit instruments and would be perfectly capable of generating inflation, “funny money” (read: credit money), boom/bust cycles, presumably a Rothbardian free market system would violate well known English Common Law concepts of private property as well.
Thing is that when the bust came through, under the circumstances you describe, a process of discrimination would happen separating the responsible savers from the irresponsible, and separating workable cashflow business from unworkable “anytime now” unicorn salesmen. Some would go bankrupt, and others would not. When the dust settled you are left with a better selection.
This process of identifying bad debts and liquidating them is the very process that allows the economy to adapt and take the next step forward. This is the process that is blocked by central bank bailouts and political interference — the established elite want to protect their position of privilege regardless of their inability to contribute meaningfully to productivity, so they fake it and force the little people to suck it up. That’s the fundamental reason why we are stuck here.
Saying “An anarcho-capitalist society WILL have FRB contracts” is incorrect, because it is possible, however much it burns you to hear, that individuals in such a society may agree to outlaw it voluntarily, because of its destructive consequences.
At any rate, like I have shown to you many times before, FRB contracts are not either ALL ethically justified or ALL not ethically justified. It depends on the knowledge and actions on a case by case basis.
Empirically, most people do not understand them. To this extent, they are unethical. To the extent that some people understand them, they are ethical.
You are incorrect to make the blanket statement that ALL FRB contracts are justified, because that presumes everyone involved are aware as to who are the owners, who is lending what, and other such factors. But in reality, today and up until today, that presumption has been empirically falsified, which means your position contradicts empirical facts.
You have no ground for your position, empirical or logical.
Some Ancap communities will ban guns and evangelicals. Some will ban porn and atheists. How can LK predict which forms of money will be adopted? I still think the problem with FRB is that it tries to combine being a current good with being a future credit type good all at the same time which would tend to be confusing. The same results can be accomplished by being explicitly one or the other. BUT I DON’T CARE ANYMORE THAN I CARE ABOUT THE PROBLEMS THAT MIGHT BE FACED BY A COMMUNITY OF LESBIANS WHO WANT TO BAN MEN. Who cares? Human beings will always have problems but the NAP solves the most important ones.
Wrong wrong wrong, you cement-head. A private community where everyone is in contractual privity with each other may agree to ban from their community whatever they want including individual people and activities by people allowed into the community. It’s called exercising the prerogatives of one’s private property.
On the other hand, marching over the mountain to another community with guns blazing to force others not in privity to follow some rule among themselves against their will is called “coercion” and it would not be allowed.
I keep saying that not only does LK not understand the concept of economic calculation, he does not understand the NAP either. Or even the concept of fraud.
“A private community where everyone is in contractual privity with each other may agree to ban from their community whatever they want including individual people and activities by people allowed into the community”
Except one would, first, have to have 100% agreement, but even then just because something is made illegal, it does not follow that the laws coercing people and stopping them from doing it are just – you can easily oppress people by banning moral exchanges.
All it takes is a few people who wish to use fiduciary media and FR banking on their own property and in private exchanges and no doubt you’d send in the private SWAT teams to oppress them, you evil freedom hater you.*
And LK’s dingbat fractional reserve arguments have been exploded so many times before. I think payees will be misled by FRB notes that do not expressly state in detail the reserve ratio of specie on the face of the note. But if no one is misled by such notes (as is proclaimed quite hysterically by the otherwise nanny-stater Keynesians), then no one will be misled by prices stated in terms of those notes either. So there would be no ABCT unless and until people are misled by the notes.
(1) ” I think payees will be misled by FRB notes that do not expressly state in detail the reserve ratio of specie on the face of the note”
Given that reserves would normally fluctuate on a day to day basis how would they update the notes?
(2) the notion that there would be a separate set of prices expressed in terms of such notes is absurd: final clearing would presumably be done in gold or some other “hard” money. Therefore separate prices make no sense.
If you would not accept some FR note for a good priced at $10, you would hardly be so stupid as to demand $50 when you think the buyer or his bank would never settle.
(2) “So there would be no ABCT unless and until people are misled by the notes. “
ABCs (assuming the logic of theory) would occur in the presence of fiduciary media or FR notes without the need for any “misled” people.
“Given that reserves would normally fluctuate on a day to day basis how would they update the notes?”
Are you so inane as to think that there is no reserve floor below which the banks are not allowed to (or just choose not to) go?
“the notion that there would be a separate set of prices expressed in terms of such notes is absurd”
Learn some history. Banknotes circulating at a discount in comparison to hard metal has happened before – even without the fractional reserve nature of the notes. Such is the natural state of market-created banknotes. The fractional reserve nature of the notes would only deepen the discount at which they would circulate.
Given that reserves would normally fluctuate on a day to day basis how would they update the notes?
In the modern world, a web page address on the note would be fine, where anyone can check the latest figures at any time. You will note that banks (in theory) provide this information right now, but they are cagey about getting independently audited on that.
As Germany is discovering, trying to pull 300 tonnes of your own gold out of the New York Fed is not by any means a simple exercise, even though the Fed claims to have thousands of tonnes of bars right there under the floor. We’ll just see how much physical delivery Germany ever sees.
LK: “Given that reserves would normally fluctuate on a day to day basis how would they update the notes?”
Considering how much time you have spent reading and writing about Austrian economics, as well as how much time you have spent debating with Austrians, I’m surprised that you yourself cannot answer this simply question.
As Robert Wenzel would say, you seem to lack the ability to think more than 2 steps ahead.
So that we don’t have to go through this silly and boring FRB “debate” again, I’m saving this template for the next time LK plays his FRB “wild card”.
Me: I think FRB will be problematic. People will be confused about the nature of the notes vs. specie warehouse receipts. Further, I doubt that average people would accept them as payment if they understood what they are. However, if those problems are solved, then the different types of notes would have different values and brands and probably wouldn’t cause an Austrian Business Cycle, but who knows? Better safe than sorry.
LK: IDIOT!!!!!!!!! Of course, no one will be misled by the notes but they will ALWAYS cause an ABC.
De Gaulle is speaking, but the words are Jacque Rueff’s. Makes me think of Keynes, who said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”… mind you Rueff at the time was not a defunct economist.
Can you clarify what you mean, JP? De Gaulle was reading a speech literally written by JR? Or De Gaulle’s thinking on this was heavily influenced by JR?
Dear Dr. Murphy,
Certainly Charles de Gaulle made his own thinking, but he was clearly in the same line as Jacques Rueff, who served twice as chairman, or co-chairman of a commission to analyse financial troubles and make policy recommandations (in 1958), and (the second time) a commission to analyse the obstacles to economic growth (1960). In both case he made bold (classical-liberal) recommandations to de Gaulle.
In Rueff’s “Le péché monétaire de l’occident” where he attacked the gold-exchange standard and argued for a return of a real gold standard, he included as chapter IV (with explicit permission from the Général) de Gaulle’s press conference. (Ironically, the part of the book in question is titled “Essais de persuasion”).
In his autobiography, “De l’aube au crépuscule”, Rueff has a chapter on the international monetary system, and he explained that at the time of this conference (feb 1965) de Gaulles’s foreign affairs minister, Maurice Couve de Murville, was a former aide of Rueff and in monetary affairs shared largely his views. According to Rueff, Couve de Murville certainly had advised de Gaulle on the diplomatic aspects of the Int’l monerary system. Moreover, in the weeks before the conference, according to Rueff, de Gaulle consulted him from time to time about financial matters. As Rueff wrote : “Plusieurs fois il me consulta sur les aspects financiers des problèmes dont je l’avais entretenu, mais je ne me doutais pas qu’il préparait une déclaration, très directement inspirée de mes vues, qui devait avoir un immense retentissement dans les relations franco-américaines”. (pp. 264-265)
The Mises Institut has the english translation of Le péché available to download (The monetary sin of the West). I thin the Autobiography is also available in english thank to Mr Lehrman.
Heavily influenced. I think Oliver pretty much covered it.
Bob,
I have a copy of a book by Jacques Rueff that Rueff autographed for Milton Friedman.
Did you steal it?
He won it in a bet. Zing!
Bets with Bob seem like a form of stealing these days!
*like*
No. It was a gift.
Again, like your bet with Bob. Zing!
Predicting a dollar crisis? de Gaulle of that man!
Also, this is just de Gaulle’s par for the course anti-Americanism? As a British foreign minister once said, Anti-Americanism is the French neurosis.
Speaking of anti-Americanism:
Why does all the anti-Americanism have to come from the Left? That’s unfortunate.
American conservatives, THEMSELVES, would be anti-American if they understood how much the government has abandoned the Constitution.
Anti-Americanism doesn’t have to, nor does it, comes exclusively from the Left. In this case, however, de Gaulle was anti-American and of the Left.
American conservatives, to the extent that they do not want Empire, would be, and often are, anti-American (policy).
De Gaulle left-wing? Where did you get that idea?
This video is no prediction of any US economic crisis in the 2000s.
I doubt whether de Gaulle was thinking of the Bretton Woods system causing Americans to go into private debt with his statement “this fact, leads Americam to get into debt…”. He is probably thinking of nothing more than trade deficits.
And he certainly was not thinking of some huge asset bubble and financial crisis in the 2000s.
Woosh,
Because there’s absolutely zero connection between national debt and the financial sector. /s
I think he has exactly the Bretton Woods system in mind. But the problems are really more related to Triffin than any Austrian ideas.
I think there’s a decent case to be made that, while Nixon’s solution bought time, the Triffin problem has at least contributed to the financial instruments that caused the current crisis.
The solution, of course, is not to return to gold. The solution is Keynes’s: something like the bancor that is a non-national standard (as de Gaulle says), but which is more elastic than gold. Bancor’s are a little retro, but SDRs could do.
The solution is neither bancors nor gold nor any other commodity with which is to be imposed on everyone against their will.
The solution for myself, and for others you have never even met, is to let others use whatever money they want and not threaten them with jail or death in order to keep them obedient to your own desired universal money.
“Elastic” is of course codespeak for “I want myself or another special interest group to be able to spend more than what we can earn through trade.”
Maybe bancors, considering where the logic of them came from, should be shoved up the same place that you have your head most of the time anyway.
“The solution for myself, and for others you have never even met, is to let others use whatever money they want and not threaten them”
I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.
““Elastic” is of course codespeak for “I want myself or another special interest group to be able to spend more than what we can earn through trade.”“
You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future (= promissory notes, bills of exchange, etc.).
But of course facts do not get in the way of delusional Austrian fantasy World peddled by M_F and people of his ilk.
” M_F and people of his ilk.”
I see a hidden premise in there LK.
🙂
Considering the Austrian economics is merely descriptive (not prescriptive), how could there exist an “Austrian fantasy World”?
Seriously Joe? Surely the claim is that the Austrian description only fits a fantasy world. The phrase ‘fanatasy world’ fits descriptive models *better* than prescriptive ones.
Apparently I was correct as to what he was saying. See below.
Forget what LK was saying. What Joseph Fetz wwas saying is wrong. You argue Austrian econ *being positive* cannot be charged with applying only to a fantasy world. That’s just silly, a standard objection to descriptions is that they are inaccurate. Id DK claimed that the multiplier were 3000 or that animal spirits are driven by the teams of unicorns in the white house you’d call that fantasy.
“Forget what LK was saying”
Am I taking fucking crazy pills here? No wonder you and Daniel get along so well.
I would have thought you’d consider a good approach to life actually.
But my point remains. That you erred while fighting LK who seems to have erred himself is beside the point. Don’t go all Callahan here.
🙂
Daniel and I get along because we both think the argument matters more than the conclusion.
Get a room.
That’s just stupid. Austrian economics is describing the real world. The description might be incorrect, but it is being applied to the real world.
You’re just playing word games where you want to say that any description that is false only describes a fantasy world because you incorrectly interpreted King Keynes, and are now trying to save face.
I only get along with Ken B because he bashes Bob.
“I only get along with Ken B because he bashes Bob.”
You’re saying that like it isn’t what is actually going on.
And DK you get along with Bob because he bashes Ken B!
I begin to suspect your motives!
🙂
Is “bash” some sort of bonobo code?
Not a prescriptive world? So Rothbardian, natural rights-based anarcho-capitalism is not normative/prescriptive vision of how the world should be?
Please don’t embarrass yourself any further, Joseph Fetz.
Austrian economics is positive, libertarianism is normative. Are you not able to distinguish between the two?
Rothbard’s attempt to say that fractional reserve banking is immoral – which is what we are talking about above – IS a normative/prescriptive ethical judgement.
His moral argument is deeply flawed and his vision of such a libertarian world without FR banking IS a fantasy world that has never existed.
But you attributed this to Austrian economics, which is not the basis of which Rothbard came to that conclusion. In fact, I don’t fully agree with Rothbard on this, but that’s a separate issue.
And, yes, Mises’s praxeological treatise on how economics works is supposedly descriptive .
But it still disputed whether Mises rejected FR banking. I have seen no evidence that he rejected negotiable bills of exchange, negotiable cheques, negotiable promissory notes etc.
What’s this have to do with the fact that you made an erroneous claim. Own up to it and move on. Jeesh!
There is no error: if you want a system where you “let others use whatever money they want” you are committed to an endogenous money system.
Despite what M_F says, such a system allows people to ” spend more than what we can earn through trade.”
He has logically contradicted himself, implying that he opposes FR banking or fiduciary media.
That commits him to Rothbard’s prescriptive vision of anti-FR banking anarcho-capitalism.
Read the original comment.
Makes sense, considering that anarcho-capitalism is a libertarian political philosophy, therefor it is going to make prescriptive statements.
“let others use whatever money they want”
Austrian economics already assumes this as a precondition of the free market.
My original point was that you’re mixing (or confusing) two distinct and separate disciplines here, when they are in fact quite different.
LK:
There is no error
Yes, you did make an error.
You conflated wertfrei Austrian economics, which is not an ethical doctrine, with libertarian arguments which are an ethical doctrine.
You said, in your typical rhetorical questioning style:
“Not a prescriptive world? So Rothbardian, natural rights-based anarcho-capitalism is not normative/prescriptive vision of how the world should be?”
This is incorrect because Austrian economics is not anarcho-capitalism.
Austrian economics is not prescriptive. It explains the logical categories of human action regardless of which specific norms are practiced.
Anarcho-capitalism on the other hand is prescriptive. It sets out rules of what people ought do and ought not do.
Despite what M_F says, such a system allows people to ” spend more than what we can earn through trade.”
Spending in claims to future money is not spending in money, which is what the argument you are responding to entails.
A free market money standard that contains circulation of future claims to money is not the “spending without earning” originally argued.
A trading a future claim to money with B, in exchange for a good, is not spending more than what is earned. It is an exchange of a future claim to money.
The Fed brings about more spending in MONEY than what is earned through production. This is separate from future claims to money.
He has logically contradicted himself, implying that he opposes FR banking or fiduciary media.
No, free market trade of future claims to money is not in opposition to being against spending money that has not been earned (What the Fed does when it conducts OMOs).
His moral argument is deeply flawed and his vision of such a libertarian world without FR banking IS a fantasy world that has never existed.
You haven’t shown how his argument is “deeply flawed.”
It’s trivial that a murder free world has never existed. But that doesn’t mean the ethic that murder is wrong and should be prohibited is a “fantasy”.
You don’t seem to grasp the difference between what has happened, with what should or could happen.
* to be peddled?
His majesty doesn’t let facts get in the way of his insults.
I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.
Oh, you must be confused again. I was referring to free market money, not money where banks are protected by monopoly privilege to create legal tender, backed by the force of jail/death of taxation which is demanded by the courts to be paid in that which contains said legal tender.
You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future (= promissory notes, bills of exchange, etc.).
Red herring. That isn’t what the Fed, the institution I am talking about, does when it spends without having produced a damn thing prior.
They don’t create credit when they BUY securities through OMOs.
We don’t live in an endogenous money world. That is a fantasy.
“I.e, a world with fractional reserve banking and any number of credit instruments – in short, a world of endogenous money, just what we have always had in the modern world.”
Here, LK. Let’s compromise. You can use whatever kind of fractional reserve banknotes you want, and I’ll stick to a hard commodity that is not fractionally reserved. Because fractional reserves are fraudulent.
“You need not have produced a damn thing to get factor inputs or goods in exchange for a promise to pay in the future”
Someone has to have produced, and you will still have to produce. In the final analysis, goods exchange against other goods. This cannot be avoided. You cannot live your life demanding things but never supplying. At least, not unless you are willing to be a mooching bum, and subsist only upon the charity of others.
People can still write IOU notes even when the primary medium of exchange is precious metals. I can write an IOU note for a bar of gold, just as easily as I write an IOU note for two elephants, or $500.
Thus, a gold-based economy retains just as much elasticity as any other from this perspective.
Bob, off topic but Krugman has mentioned the “owe it to ourselves” idea again:
krugman.blogs.nytimes.com
“You could argue that it would have helped to prepay some of our future costs by paying down debt and indeed having the government acquire assets while the demography was favorable – not because this would have directly increased future resources (debt is money we owe to ourselves) but because it would have reduced the need for higher taxes, and hence the distortionary effect of those taxes. And this argument was, indeed, the reason people like me wanted to protect the Social Security lockbox way back when.”
Sorry, I didn’t post the whole link:
krugman.blogs.nytimes.com/2013/01/17/on-the-non-equivalence-of-greenhouse-gases-and-entitlement-spending/
thanks keshav, two issues where i disagree with krugman! awesome
The apt moment to remind Bob he still owes me on the OLG stuff!
I also would like to have an answer…
skylien, was it me and you who talked about the OLG stuff yesterday, because I was looking around for my comment and couldn’t remember where, ‘I put it’. If so could you point me in the right direction?
Did you just end your shift spamming the ‘Keynes vs Hayek Round Two’ videos?
http://www.youtube.com/all_comments?v=GTQnarzmTOc
Please tell me that you’re being paid to do that, because if not, you’ve got some major issues.
‘Major issues’. Such as?
Spam? Is that what your mother fed you as a child? Probably could have used some milk.
Why are you posting so many titles of other youtube videos and off topic comments on that Hayek versus Keynes video?
Are you OK? (Serious question).
Major_Freedom, might I ask why you post so many anonymous comments on a website? I’m fine, however, you on the other hand, (I’ve got two), who knows?
That’s really what you’re going to go with? (facepalm)
I’d put my hand to my face but it’s all sweaty, maybe later, I don’t mind.
Ok, you convinced me one hand to the face, it was ok.
xgsmmy:
“Major_Freedom, might I ask why you post so many anonymous comments on a website? I’m fine, however, you on the other hand, (I’ve got two), who knows?”
I’ll answer your question AFTER you answer my question first.
Whoa, that’s nuts. It’s sad, really.
That’s nuts? Delusional. Sad? Yes, definitely.
You mean it’s fantasy Dan?
Gee, you’d almost thing you were saying that a wildly wrong description of the world could if you wanted to slam it be described as a fantasy world!
Imagine.
What are you talking about, Ken? Clearly you didn’t actually click on the link to see what I was referring to. Hint, there was no description of the world that I was slamming.
Dan, it was multiple posts every hour for 21 straight hours!
Wait, I take that back, over 24 hours, and the days before.
Yeah, I know. There were some disturbing comments in there, as well. It was a little disconcerting to see that.
Yeah, I know. There were some disturbing comments in there, as well. It was a little disconcerting to see that.
I just can’t seem to shake these guys. They’re all over me. They’ve got my number.
So, are linguistics and crypto your trade, or do you just do it for fun?
Also, is comment-sqashing you regular practice? I mean, that was the point of it, wasn’t it?
Considering what I saw in the comments of that video, I can only conclude that you’re internet alias is either controlled by more than one person, or that you’re one fucked up individual.
You wouldn’t happen to be related to “g4macdad” would you?
xgsmmy:
“I just can’t seem to shake these guys. They’re all over me. They’ve got my number.”
You are putting yourself out there.
Nobody’s ganging up on you, they are simply responding to the rather odd and disturbing behavior you are displaying.
Seriously, what is up with you? How can you spend what seems like a 24 hour period, constantly posting such comments? What are you trying to achieve?
Why post so many titles of random youtube videos in the comments?
Was it narcotic influenced?
Hey man, I don’t know what you’re going through but I sincerely hope you’re OK. I don’t know if there is anything I can do for you, but if you need someone to talk to you can email me at cotterdan321@yahoo.com
that you’re one fucked up individual.
Si, senor.
You wouldn’t happen to be related to “g4macdad” would you?
No.
Was it narcotic influenced?
Is water a narcotic? Fluoride? (Yikes.)
Thanks, Dan, really.
Wahat are YOU talkinmg about Dan? Because I am talking about a general proposition Fetz put forth: that ‘fantasy world’ is a meaningless criticism of a descriptive model, like ‘blue’. Yopu cannot indicate you think a descriptive model is wacked by calling it ‘blue’ Fetz says you cannot indicate you think a descriptive model is wacked by calling it ‘a fantasy world’. Look back.
Ken, I know what you’re saying, and I probably could have worded it better, but that was not my argument.
I was responding to the fact that he concluded this from a purely prescriptive argument. IOW, how could that Austrian fantasy world exist in this context if the argument being made is a prescriptive one?
LK then further substantiated my claim by correctly identifying that the argument being put forth was a libertarian one. But he still conflated this with Austrian economics.
xgsmmy,
There is your comment:
http://consultingbyrpm.com/blog/2013/01/thoughts-on-glenn-beck.html#comment-56192
I’ll give you my answer after Passover, Ken.
Bob, you didn’t happen to see that OLG post that may or may not have been in reply to skylien, did you? It’s not terribly important, but if you know were I should look.
Hmm? I don’t think Bob was kidding (busy schedule).
Possible, but I could see it being a joke, given the exchange I had with Ken over alleged Biblical disparities.
Like the others here, I’m not sure how much this is a joke.
This is such a retarded way of thinking. Someone should just say: “Well, if we owe it to ourselves, then we can easily walk away from an obligation to our own selves.” Less government intervention equals more prosperity – after the required and inevitable liquidation of malinvestments, of course.
At any rate, there is no “us”; No one is entitled to the property of others.
LK still does not understand either the NAP or economic calculation but he knows that he cannot allow them to exist or even be defined in plain language without losing the argument. When we make the claim that certain events and results (funny money, inflation, boom/bust0 violate the well known English Common Law concepts of private property, freedom of contract and the various civil and criminal prohibitions against fraud and assault to person and property, LK’s only line of defense is to proclaim that NO SOCIETY HAS EVER EXISTED WHICH SUCCESSFULLY PREVENTED VIOLATIONS OF THOSE INSTITUTIONS. To even examine on a case-by-case basis whether certain actions and their results were under a regime
a) where rights were in fact protected or
b) where rights were violated by criminals or the government
is specious, according to LK, because the so-called perfect Rothbardian world has never existed. What a load of crap. That’s his argument and that is why it is pointless to “debate” him.
Murder, rape and theft are still illegal in Detroit and Chicago despite years and years when there were thousands of those crimes. Nevertheless, it is still possible (and quite simple) to determine if certain results happened when (or because) rights were protected as opposed to when they were violated. That is true even in a situation where the rights were not perfectly respected and enforced all of the time (like in reality).
“When we make the claim that certain events and results (funny money, inflation, boom/bust0 violate the well known English Common Law concepts of private property, “
That is a bizarre statement.
Since any imaginary free market that is not coercing businesses and people would have FR banking and credit instruments and would be perfectly capable of generating inflation, “funny money” (read: credit money), boom/bust cycles, presumably a Rothbardian free market system would violate well known English Common Law concepts of private property as well.
As for why I think the Rothbardianism is wrong, your comments are nothing but a straw man.
The system is wrong because the ethical arguments offered in defence of it are flawed, as are economic arguments, e.g.,
http://socialdemocracy21stcentury.blogspot.com/2011/08/rothbards-argument-for-natural-rights.html
” any imaginary free market that is not coercing businesses and people would have FR banking”
I must have missed the part where creating fraudulent property titles and loaning them out is part of a “free market”. Are fractional reserve granaries part of the free market, too?
Thing is that when the bust came through, under the circumstances you describe, a process of discrimination would happen separating the responsible savers from the irresponsible, and separating workable cashflow business from unworkable “anytime now” unicorn salesmen. Some would go bankrupt, and others would not. When the dust settled you are left with a better selection.
This process of identifying bad debts and liquidating them is the very process that allows the economy to adapt and take the next step forward. This is the process that is blocked by central bank bailouts and political interference — the established elite want to protect their position of privilege regardless of their inability to contribute meaningfully to productivity, so they fake it and force the little people to suck it up. That’s the fundamental reason why we are stuck here.
“Some would go bankrupt, and others would not. When the dust settled you are left with a better selection.
In other words, a boom-bust cycle.
“Since any imaginary free market that is not coercing businesses and people would have FR banking”
One cannot make definitive statement of what specific instruments WILL exist in such a society.
You keep making that false claim.
Saying “An anarcho-capitalist society WILL have FRB contracts” is incorrect, because it is possible, however much it burns you to hear, that individuals in such a society may agree to outlaw it voluntarily, because of its destructive consequences.
At any rate, like I have shown to you many times before, FRB contracts are not either ALL ethically justified or ALL not ethically justified. It depends on the knowledge and actions on a case by case basis.
Empirically, most people do not understand them. To this extent, they are unethical. To the extent that some people understand them, they are ethical.
You are incorrect to make the blanket statement that ALL FRB contracts are justified, because that presumes everyone involved are aware as to who are the owners, who is lending what, and other such factors. But in reality, today and up until today, that presumption has been empirically falsified, which means your position contradicts empirical facts.
You have no ground for your position, empirical or logical.
Some Ancap communities will ban guns and evangelicals. Some will ban porn and atheists. How can LK predict which forms of money will be adopted? I still think the problem with FRB is that it tries to combine being a current good with being a future credit type good all at the same time which would tend to be confusing. The same results can be accomplished by being explicitly one or the other. BUT I DON’T CARE ANYMORE THAN I CARE ABOUT THE PROBLEMS THAT MIGHT BE FACED BY A COMMUNITY OF LESBIANS WHO WANT TO BAN MEN. Who cares? Human beings will always have problems but the NAP solves the most important ones.
“however much it burns you to hear, that individuals in such a society may agree to outlaw it voluntarily, because of its destructive consequences.”
And outlawing something moral would mean this libertarian society coercing businesses and people. QED.
“And outlawing something moral would mean this libertarian society coercing businesses and people. QED.”
What does that add to the discussion? Just calling it “moral” doesn’t make it so. Particularly when that seems to be the very dispute.
Some consider it fraud, so it’s as moral to ban as theft, to those who agree.)
Wrong wrong wrong, you cement-head. A private community where everyone is in contractual privity with each other may agree to ban from their community whatever they want including individual people and activities by people allowed into the community. It’s called exercising the prerogatives of one’s private property.
On the other hand, marching over the mountain to another community with guns blazing to force others not in privity to follow some rule among themselves against their will is called “coercion” and it would not be allowed.
I keep saying that not only does LK not understand the concept of economic calculation, he does not understand the NAP either. Or even the concept of fraud.
“A private community where everyone is in contractual privity with each other may agree to ban from their community whatever they want including individual people and activities by people allowed into the community”
Except one would, first, have to have 100% agreement, but even then just because something is made illegal, it does not follow that the laws coercing people and stopping them from doing it are just – you can easily oppress people by banning moral exchanges.
All it takes is a few people who wish to use fiduciary media and FR banking on their own property and in private exchanges and no doubt you’d send in the private SWAT teams to oppress them, you evil freedom hater you.*
* N.B. Last words are ironic.
“it does not follow that the laws coercing people and stopping them from doing it are just”
Honest question, L.K. (or Bob) did he (or you, Bob) say such laws (that outlaw certain “moral exchanges” ) were necessarily just?
I’m trying to figure out where this conversation is coming from?
LK finds it necessary to engage in obfuscation and the distortion of simple concepts and the well known meaning of words.
And LK’s dingbat fractional reserve arguments have been exploded so many times before. I think payees will be misled by FRB notes that do not expressly state in detail the reserve ratio of specie on the face of the note. But if no one is misled by such notes (as is proclaimed quite hysterically by the otherwise nanny-stater Keynesians), then no one will be misled by prices stated in terms of those notes either. So there would be no ABCT unless and until people are misled by the notes.
http://factsandotherstubbornthings.blogspot.com/2012/07/bob-roddis-makes-bad-argument.html?showComment=1342649925304#c790455305419085448
(1) ” I think payees will be misled by FRB notes that do not expressly state in detail the reserve ratio of specie on the face of the note”
Given that reserves would normally fluctuate on a day to day basis how would they update the notes?
(2) the notion that there would be a separate set of prices expressed in terms of such notes is absurd: final clearing would presumably be done in gold or some other “hard” money. Therefore separate prices make no sense.
If you would not accept some FR note for a good priced at $10, you would hardly be so stupid as to demand $50 when you think the buyer or his bank would never settle.
(2) “So there would be no ABCT unless and until people are misled by the notes. “
ABCs (assuming the logic of theory) would occur in the presence of fiduciary media or FR notes without the need for any “misled” people.
“Given that reserves would normally fluctuate on a day to day basis how would they update the notes?”
Are you so inane as to think that there is no reserve floor below which the banks are not allowed to (or just choose not to) go?
“the notion that there would be a separate set of prices expressed in terms of such notes is absurd”
Learn some history. Banknotes circulating at a discount in comparison to hard metal has happened before – even without the fractional reserve nature of the notes. Such is the natural state of market-created banknotes. The fractional reserve nature of the notes would only deepen the discount at which they would circulate.
Discounting a FR banknote is a different thing from having a separate set of prices for commodities.
In the modern world, a web page address on the note would be fine, where anyone can check the latest figures at any time. You will note that banks (in theory) provide this information right now, but they are cagey about getting independently audited on that.
As Germany is discovering, trying to pull 300 tonnes of your own gold out of the New York Fed is not by any means a simple exercise, even though the Fed claims to have thousands of tonnes of bars right there under the floor. We’ll just see how much physical delivery Germany ever sees.
LK: “Given that reserves would normally fluctuate on a day to day basis how would they update the notes?”
Considering how much time you have spent reading and writing about Austrian economics, as well as how much time you have spent debating with Austrians, I’m surprised that you yourself cannot answer this simply question.
As Robert Wenzel would say, you seem to lack the ability to think more than 2 steps ahead.
So that we don’t have to go through this silly and boring FRB “debate” again, I’m saving this template for the next time LK plays his FRB “wild card”.
Me: I think FRB will be problematic. People will be confused about the nature of the notes vs. specie warehouse receipts. Further, I doubt that average people would accept them as payment if they understood what they are. However, if those problems are solved, then the different types of notes would have different values and brands and probably wouldn’t cause an Austrian Business Cycle, but who knows? Better safe than sorry.
LK: IDIOT!!!!!!!!! Of course, no one will be misled by the notes but they will ALWAYS cause an ABC.
Me: Well, then maybe FRB notes shouldn’t be used.
LK: IDIOT!!!!!!
So compared to DeGaulle you guys are late to the party huh?
Who was it again, thoug who said “In the long run we are all dead?”
Certainly DeGaulle is quite dead for a very long time.