22 Jan 2014

Bob Murphy vs. Bill Still

Economics, Federal Reserve, Gold, Money, Shameless Self-Promotion 20 Comments

It’s the master of disaster versus the Money Master. It was supposed to be about money, but then we took off the gloves and started talking anarchy. Oh boy. When I saw the crowd was with him early on, I had to break out my Jimmy Stewart impression. I wasn’t screwing around.

Incidentally, I have some major work deadlines so this is all you’re going to get (save for one quick post on Austrian monetary theory) over the next few days. You might as well watch it to avoid withdrawal.

20 Responses to “Bob Murphy vs. Bill Still”

  1. Cosmo Kramer says:

    So many straw men, so little time.

  2. andrew' says:

    What is your take on their key idea that one can never repay principle plus interest when existing dollars only equal principle unless you increase money by increasing interest ( by borrowing) (or by increasing velocity- the part they don’t acknowlwdge)?

    • ElectricUniverseAnyone? says:

      You’re strawmaning Bill Still and Mrs Ellen Brown, come on. The claim is that somebody, somewhere must default on the loan and feed the bankers with his raw flesh. The claim is simply wrong:

      • andrew' says:

        That’s what I said. And what says Bob?

        • andrew' says:

          First link,thanks, I think discusses a hypothetical ” increased velocity” fix. But what about when the fed is causing a drop in velocity aka the last 4 or 5 years corresponding to a financial crisis, a depressed economy, debt repayment, rising govt debt, disinflation (despite unprecedented fed moves)?

          I’m still not sure the first link doesn’t require rolling over loans with additional money creation additional interest. History of constantly rising deb sure doesnt invalidate the question.

          I realize it is not as dire and binding as the greenbackers think, but I’m also not sure it isn’t part of our problems. Bobs story seems to rely on an accelerating economy – hard to do in deflation.

          • andrew' says:

            I’ll have to go munch on this.

            You won’t find Krugman or even Sumner “dignifying” such questions with their eminence. So thanks be to Bob.

            • WalThornhill says:

              But’s it’s not an increased velocity. You’d have to compare it to something to declare it increasing.

              And no you did not say that somebody sowhere must go bankrupt, you said “one” which means not somebody sowhere if I’m correct.

              The debt is rising because it benefits those who make it happen and because the “borrowers” have no say in it i.e. they are cattle-collateral in the scheme.
              Your statement is just a delusional as those claiming that low interest rates on bonds prove anything with regards to helath of US economy while it’s being directly bought up by fed.
              Canada seem to wiggled out of debt at some point, which proves it’s not inevitably growing.

              “I like Bill. As he said, as I interpret it, he’s a presenter, not a debater.
              Give me 1000 of these type debates over one exercise in narcissistic injury that we get every week spilling out from a certain NYT column”
              And you’re a sophist. Presenter of what, the ideas he can’t defend? Ok where’s the guy or gal (isn’t it Ellen Brown?) so that she can explain out her utterances:

              What do you like about a guy who is clearly trying to trick you into believing in benevolent politicians central planer angels?
              No interest – that’s evil, usury! But money out of nothing eating out anything that market produces – every innovation and every improvement which would inevitably lower the prices in free of government intervention money, because you know we need stable prices. Stable prices are our goal and mantra and if we get rising prices by chance (don’t worry it can’t be angel-politicians fault, the philosopher kings can’t be responsible) the government should just tax more and burn the money.
              Are you mad?

            • George Stilglitz IIIV says:

              ignore the V shizz, it’s not an “equation,” but an identity, as it is absurd to dignify any quantity with a place in an equation unless it can be defined independently of the other terms in the equation.

              furthermore V is rising relative to what it would be if intangible, research, IP, and goldfish weren’t just updated back to 1929

              at best this crap tells you:

              It is true that in periods of falling money value, when money is expected to fall further, people will try to reduce their cash holdings to a minimum. But as a universal thing this will be impossible. The total quantity of money remaining the same, or even increasing, somebody must hold it, and the average per capita holding will not decrease. The faster consumers seek to get rid of money, the faster tradesmen must take it in. The average individual cash holding must always be the total supply of money outstanding divided by the population.

              What causes prices to go up and down, therefore, is not changes in the average cash holding, but changes in the valuations that people put on the monetary unit.

              V is not a cause but a result, or even a mere side effect. People who are more eager to buy goods, or more eager to get rid of money, will buy faster or sooner.

              But this will mean that V increases, when it does increase, because the relative value of money is falling or is expected to fall.
              It will not mean that the value of money is falling, or prices of goods rising, because V has increased.

              When people value money less and goods more, they will offer more money for goods, and may increase “velocity of circulation.” But it is not the mechanical increase in velocity of circulation that causes any subsequent price rise, let alone any proportional price rise.
              It is the changed valuation by individuals of either goods or money or both that causes the increased velocity of circulation as well as the price rise.
              To go further… Increased velocity of circulation is not, in itself, even a contributing cause of higher commodity prices.

              It is not even a link in the chain of causation. Increased velocity of circulation and higher commodity prices are jointresults of a change in the value of money in relation to the value of goods.

              When people value money less in relation to goods, they offer more money for goods; when they value it more in relation to goods, they offer less money for goods.

              Any change in velocity of circulation is likely to be a result of these changed value decisions: it is not itself a cause of the change in value.

              There it is. Re-read the last sentence, for this is the point: this is what the modern velocity does tell us, the rate of change in the preferences of market participants.

              Said differently, velocity measures how often people change their minds. If anything at all, velocity suggests the population is docile, unprepared for the surprising speed at which the groceries- and gas-sensitive family budget changes.

    • George Stilglitz IIIV says:

      An increase in V may come about through greater eagerness to buy goods. But the velocity of circulation of money cannot be speeded up to anything like the extent commonly assumed by the mathematical quantity theory.
      This particularly applies to spending for consumption.
      There is a customary (and even a maximum) rate of consumption of food, for example, which is not speeded up even in a hyperinflation. People who are paid weekly may buy their entire week’s stock of food (or whatever part of it will keep) on the day they get their weekly paycheck rather than buy their needs each day. But this will not increase the weekly V.
      In a hyperinflation, people may stock up much sooner than otherwise in their purchase of durable goods — housing, automobiles, appliances, clothing, jewelry, works of art, etc. But even this will not increase V over a prolonged period, unless the rate of production is correspondingly speeded up. After any buying spree of durable goods, there is likely to be, other things being equal, a less than normal rate of V for such durable goods — partly because nearly everybody will be “loaded up” with them, partly because retailers’ stocks will be exhausted or low, unless output can be equally speeded up.
      These “hurryings” and “waitings” (to use the vocabulary of L. Albert Hahn) are part of the business cycle.

      Hazlitt is saying in the sentence above that if there were no monetary manipulation, the “business cycle” phenomenon may not plague us.

      He then points us to the annual rate of turnover of bank deposits, and as bank deposits in the United States cover nearly nine-tenths of the media of payment, it is illustrative [SOME THINGS CHANGE HERE FOLKS]:

      What is most striking, when we examine the figures, is first of all the wide discrepancy that we find between the rate of turnover of demand deposits in the big cities, especially New York, and the rate that we find in 218 other reporting centers. In August of 1966, the annual rate of turnover of demand deposits in these 218 small centers was 34.1. In six large reporting centers outside of New York City, it was 52.2.When we come to New York City itself, the rate of turnover was 112.7. In other words, the rate of turnover of demand deposits in New York City was more than three times as great as it was in small towns and country districts.

      This does not mean that people in New York City were furiously spending their money at three times the rate of people in the small centers. (We must always remember that each individual can spend his dollar income only once.)
      The difference is accounted for by the fact that New York, with the New York Stock Exchange, the American Stock Exchange, the stock brokers and bond houses, and a myriad of speculative markets for commodities, is the great center of speculation in the United States. This fact is further emphasized by comparisons over a period of years. For example, in 1943, the turnover of demand deposits in New York was only a little greater than in other reporting centers. But it has kept increasing since then, in relation to other centers. This increase had corresponded broadly with the measurable increase in speculation during the same period.

  3. Andrew' says:

    Great debate.

    What Bill doesn’t seem to understand, or at least I’ve never seen him address, is once you go Greenback, you never go back. Why then, wouldn’t the government just inflate? And if you are a populist you even think that would be a wonderful life!

    If I were to try to pinpoint the problems, Bill and his side think money is too real.

    The Austrians, IMHO, don’t quite accept that once the government is managing the money, then the first thing is for them to do it correctly. If the government fools the economy into the boom and bust, then there is no virtue in following through with it if they could instead get the money supply correct. The bankruptcies are not the free market correction, they are a correction under whatever monetary error the government/fed happen to be making. So, they can choose too little money coming out of a bust and Scott Sumner explains why they systematically do so.

    • Major_Freedom says:

      “What Bill doesn’t seem to understand, or at least I’ve never seen him address, is once you go Greenback, you never go back.”

      That’s falsely assuming humans are robots who lack the ability to change money on purpose.

      • andrew' says:

        That part was a joke.

  4. beb says:

    loved how Bill straight up couldn’t answer one question by the audience and those 2 times when he forgot what he was saying that was really embarrassing

    his attitude sucked also, but Bob obviously was the better man in this debate

    • Anonymous says:

      To the contrary, to me those moments dignified him.

      If you don’t know an answer the honest thing to do is to tell the truth and not some half-assed stuff made up on the fly. If you are the supposed expert It takes courage to recognized that you don’t know something.

      • Davis says:

        You’re joking, surely? What’s dignified about not being to answer a question as basic as that? Someone in his position should be able to answer that almost reflexively. But he didn’t have an answer even after pondering it, which is extremely telling of his intellectual rigor.

        That question btw, takes place @ 35:10.

        • Casual Reader says:

          It’s dignifying to say “I don’t know” when I don’t know, instead of baffling people with bullshit. That’s intellectual honesty. And difficult to do in front of a lot of people.

          You know, I have the bad habit to pay more attention to what people say than how they say it. For me the better argument (or man if you wish) is that with the best logic.

          I couldn’t care less if the guy doesn’t know an answer or forget a couple of times what he was saying IF his reasoning makes sense. (I’m talking in general)

          Politicians excel at communicating and projecting certain attitudes, sure they have to be the best men. I guarantee you they will never say they don’t know how to solve a problems.

  5. Andrew' says:

    I like Bill. As he said, as I interpret it, he’s a presenter, not a debater.

    Give me 1000 of these type debates over one exercise in narcissistic injury that we get every week spilling out from a certain NYT column.

  6. George Stilglitz IIIV says:

    Yeah fantasitc: 6m55s
    Bill Still: “Banks create 97% of ‘all national monies'”


    “Most credit in the US is created by nonbanks; virtually all bank lending is funded by the creation of liabilities that are not subject to reserve requirements.

    Today, credit creation in general, and money creation in particular, are no longer tied to the stock of reserves (i.e. the stock of banks’ deposits at the Fed).

    Today, bank deposits at the Fed have only one real role—to facilitate management of the payments system. They are used to settle transactions among banks. Thus:

    The old notion that the quantity of bank reserves constrains lending in a fiat money world is completely erroneous.

    This is clearly seen in the long-term evolution of reserves and credit.

    In 1951, total commercial bank deposits at the Fed were $20 billion larger than they were at the end of 2006.
    Over the same period, total US credit-market assets rose by over 10,000%.

  7. George Stilglitz IIIV says:

    guys this is economics in one lesson, this is Hazlitt, our LEADER.

    Why would Mises say that?

    Because he is the conduit to the American Main Street, “Par Excellance”

    Now for neither:

    “From the standpoint of the commonly shared interest of all members of society, the quantity of money, is irrelevant. Any quantity of money provides all the services that indirect exchange can possibly provide. Both in the short-run, and in the long-run.

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