18 Jan 2013

Potpourri

Economics, Federal Reserve, Financial Economics, Potpourri, Shameless Self-Promotion 26 Comments

==> An interesting inventory at IER of “federal assets above and below ground.” I didn’t do this particular blog post, but I think it draws on some numbers I compiled in the past. This notion that if the feds don’t get to raise the debt ceiling, they have no choice but to cut PBS and Granny’s Social Security checks, is silly. (Not that I am in favor of PBS or Granny’s SS checks.)

==> If you think the trillion dollar coin idea is silly, you’ll like this cartoon (which the artist sent me today); otherwise, you will hate it.

==> An older post from Nick Rowe on “Dutch capital theory.” This guy is too clever by half.

==> Jeff Tucker’s tribute to Aaron Swartz.

==> JP Koning on the interaction of legal tender laws and purchasing power. I’ve often thought there was a gap in standard Austro-libertarian complaints about legal tender laws. The mere fact that Federal Reserve Notes are legal tender doesn’t pin down their purchasing power; merchants could say, “This item is either one ounce of gold, or 80 billion US dollars,” and debt contracts could have gold clauses in them. But on the other hand, there must be a reason they passed legal tender laws. I’m not saying JP has the full story, but he’s always interesting on this stuff.

==> Speaking of interesting! Next week–Monday through Wednesday–I’ll be giving a 3-part video series for the Laissez-Faire Club on Austrian business cycle theory. This is the most concise explanation I have given, so if you’ve never taken my more academic online classes because you’re too busy, this might be for you. Doug French explains it all here, in this pitch aimed at the investor/business owner demographic.

26 Responses to “Potpourri”

  1. Bob Roddis says:

    The coin cartoon is outstanding. Not only does it apply to the coin but to the entirety of Keynesian excuse-making for stealing purchasing power in all of its ghastly permutations. Further, the reaction to the coin proposal proves my suspicious that our present-day eager-beaver Keynesian sparing partners do not understand that the whole thing is a scam that is supposed to remain obscure, mysterious, unintelligible and boring.

  2. Davis says:

    Make sure you mention Rothbard as much as possible in your LFB talk. It seems that place only sells five of his books.and features none of them.

    • Richie says:

      I see someone else has visited EPJ and has seen the controversy over there. Joseph Fetz posted a rant that seemed totally out of character for him.

    • guest says:

      We know why “Hayek and not Mises” thanks to EPJ.

      The “Mises and not Rothbard” thing would seem odd except for the Koch/Rothbard/Cato thing; and I imagine that’s the issue, there.

      May as well post these:

      The Kochtopus vs. Murray N. Rothbard
      http://www.lewrockwell.com/gordon/gordon37.html

      The Kochtopus vs. Murray N. Rothbard, Part II
      http://www.lewrockwell.com/gordon/gordon39.html

  3. Bob Roddis says:

    An interesting inventory at IER of “federal assets above and below ground.”

    This sounds like it could be the beginnings of an Austrian theory of “idle resources”.

    • Matt Tanous says:

      Thought we already had one of those: http://mises.org/document/6116

      • Bob Roddis says:

        I was sorta joking that all the stuff and vacant land owned by the Feds was “idle”. Therefore, we shouldn’t have any inflation until they sell it off and put it to good use.

  4. konst says:

    I don’t think that’s a good definition of legal tender laws and I don’t think their purpose is actually for the discharge of debt as generally believed (even though that’s their claimed purpose).

    Don’t forget that we’re dealing with sociopaths, i.e. the upper echelons of the parasitic system aka the head parasites (known to the general public as those with titles as the president, secretaries and heads of various cabinet positions, the four letter three letter agencies, and various sociopaths known by the title Congressmen.

    The nature of sociopaths is to steal the work and resources of others be deception and violence. They do this by deceiving their victims into thinking that they, the sociopaths, have their victims interest at heart and that they need them for their survival. How they do this would take too long to explain.

    One of the deceptions is to convince the victims that something that their victims produce is equivalent to the substitution item that the sociopaths provide. That enables the sociopaths to steal the resources and products of their victims’ labour. That’s the real purpose of “legal tender laws”, i.e to facilitate and cover the tracks of the sociopaths actions.

    You may ask why the victims go along with this and how is it that some victims “wake up” as many people call it. A subject for another time.

  5. JP Koning says:

    “But on the other hand, there must be a reason they passed legal tender laws.”

    Bob, I’d hazard a guess (purely unsubstantiated) that in a free banking world governed by lex mercatoria (ie private merchant law) the concept of legal tender would arise spontaneously.

    If a debtor arrives to pay a creditor, the creditor can refuse to accept the media proffered, forcing the debtor into unnecessary default. Huge amounts of debts are created in a day’s worth of business, and I’d imagine that negotiating settlement media for each debt would be costly in terms of time. To avoid being swamped by unnecessary default cases, I could imagine merchant law evolving a list of common media that must always be accepted to settle debts.

    Naturally, all sorts of interested parties would lobby to have that list include their preferred asset. Nevertheless, there seems to me to be a certain “market” logic to legal tender. Standardization is not always a statist concept.

    • konst says:

      Mr. Koning,
      I’m sure your knowledge of economics and history is greater than mine but, in my humble opinion, this I think is one of your biggest mistakes:

      “If a debtor arrives to pay a creditor”

      This is similar to most of the general public thinking that “the government grants people the right to…” whereas libertarians would argue that those are natural rights.

      It seems to me it’s not “market logic” but “statist logic” mistaken for free market logic.

    • Matt Tanous says:

      “If a debtor arrives to pay a creditor, the creditor can refuse to accept the media proffered, forcing the debtor into unnecessary default.”

      Far more likely that the media for payment would be selected in the original contract.

      • JP Koning says:

        Maybe. There’s 2 states. One in which there’s no legal tender and everyone has to negotiate terms concerning settlement media into each contract. The second is one in which only people who care about specific media have to negotiate the terms into contracts and everyone else uses the low cost legal default. It’s not inconceivable for the second to be more efficient.

      • guest says:

        The second is one in which only people who care about specific media have to negotiate the terms into contracts …

        One of the purposes of a contract is to specify what constitutes repayment.

        Even if there are many qualified media (or goods or services) from which to choose, they will be listed in the contract.

        And having a contract specify uncommonly utilized media of repayment would not be any more difficult or unwieldy than if the media specified were commonly utilized: In either case, either the debtor believes he will be able to fulfill the contract as specified, or the parties will not agree to a contract.

        • JP Koning says:

          If that’s the case (and I don’t think it is) then you can see why modern legal tender laws would be irrelevant. If everyone is negotiating settlement media into contracts, then everyone is simply bypassing legal tender laws, and we should stop making a big deal out of them.

          I don’t think Bob specifies settlement media in any of his bets, for instance. He just denominates them in USD. What if the guy who has won tells Bob to settle his bet dues with pistachio nuts? Bob might agree. Or he might point to legal tender laws that allow him to pay with US notes.

          • Bob Murphy says:

            What if the guy who has won tells Bob to settle his bet dues with pistachio nuts?

            I just sent David Henderson 800 pounds of pistachio nuts.

          • guest says:

            I don’t think Bob specifies settlement media in any of his bets, for instance. He just denominates them in USD.

            If Bob agreed to pay the EQUIVALENT of $500 in goods and services, then it was still specified.

            I think, though, that the bet was FOR $500.

            • JP Koning says:

              $500 what?

              Notes? Coins? US private bank deposits? Paypal dollars? Dwolla dollars? Liberty dollars? Eurodollars?

              Henderson can specify Paypal but Murphy can say no, only US/Fed notes and coin are actual legal tender.

              • guest says:

                500 of this –> “$”
                :D

  6. The Existential Christian says:

    The JP Koning article is great, but one quibble: Referring to McDonald’s patties as “beef” is, I think, at best misleading.

  7. Adrian Gabriel says:

    Signed up for Monday. Looking forward to it. Will be at a starbucks in Astoria, Queens. Bob Murphy is the new Rothbard

    • Bob Murphy says:

      OK Adrian but if people in the next table overhear my brilliant analysis, they have to pay LFC.

      • successfulbuild says:

        Robert Murphy’s classroom: Where answering the question right means you flunk out!!!

  8. Ivan Jankovic says:

    Bob,
    OT but I could not resist. Gene Callahan censored this comment on his silly tread on how warm weather in New York City proves global warming. I simply posted the temperature graph for the last 17 years

    http://www.woodfortrees.org/plot/rss/from:1997/to:2013/plot/rss/from:1997/to:2013/trend/plot/none

    • successfulbuild says:

      It was probably censored because there’s a point at which comments are so stupid it becomes incapable for the other side to reply (Major_freedom, Matt Tanous, Adrian Gabriel), etc.

      What proves global warming is that human produced carbon emissions is the ONLY thing that could be causing it. No other factor allows temperatures to get this high.

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