21 May 2014


Potpourri 59 Comments

==> Scott Horton praises David Stockman on Stockman’s analysis of central banking and the warfare state. Remember kids, Stockman is our headline speaker at this year’s Night of Clarity!

==> When I first joined IER, I met Robert Bryce (we were attending some of the same briefings etc.). He is a really sharp guy who knows his stuff and has come to a free-market energy position not because of ideology but because of the basic facts. Listen to his interview with Tom Woods.

==> Rob Bradley sent me his (and co-author’s) nuanced take on Gabriel Kolko, who has just died. Rothbard was a big fan of Kolko.

==> Gerry O’Driscoll discusses Hayek on the 115th anniversary of his birth (Hayek’s, not O’Driscoll’s).

==> Speaking of Hayek, Daniel Kuehn taunts the Austrian giant and may have invited bad karma.

==> Especially if you have young kids, you might want to read this description of what drowning actually looks like in the real world.

==> Josiah Neeley talks about John Holdren’s awkward past. It almost makes me forgive Josiah for temporarily blogging at Noah Smith’s site.

==> Can’t remember if I already pushed this: In this post I walk through the basics of the gold standard, fiat money, trade deficits, etc.

==> Be careful if you like to sell pot brownies.

==> Apparently Apple is getting cuddly with Big Brother.

59 Responses to “Potpourri”

  1. Bob Roddis says:

    Stockman’s speech and book are outstanding on differentiating the difference between crony capitalism and laissez faire. It is a simple difference that “progressives” and most libertarian opponents will not make. The positive thing about Kolko was his attempt to make this distinction because leftists and “progressives” rarely do.

    However, I’m glad that someone has subjected Kolko to rigorous analysis. He was a leftist, after all, and therefore his analysis and definitions were invariably mushy and muddy. As I never tire of pointing out TO OTHER LIBERTARIANS AND AUSTRIANS, we spend 99% of our time “debating” “progressives” about nothing other than their relentless obfuscations regarding basic DEFINITIONS of terms associated with simple and self-evident concepts such as the NAP, private property, laissez faire and economic calculation. I also never tire of pointing out that they must engage in this tactic because that is all they have left.

    Note the subject matter of Stockman’s speech which I have posted here before:

    The Great Depression thus did not represent the failure of capitalism or some inherent suicidal tendency of the free market to plunge into cyclical depression—absent the constant ministrations of the state through monetary, fiscal, tax and regulatory interventions.  Instead, the Great Depression was a unique historical occurrence—the delayed consequence of the monumental folly of the Great War, abetted by the financial deformations spawned by modern central banking.

    Has anyone ever found a “progressive” who would even concede that there exists this alternative theme regarding the cause of the Great Depression? Our opponents’ tactic consists almost exclusively of pretending that our positions do not even exist. I submit that they act like this because they are afraid of our analysis and are afraid to directly engage it.

    • Matt M (Dude Where's My Freedom)) says:


      You quote that speech a lot, but there’s one line in it that bugs me: “Instead, the Great Depression was a unique historical occurrence…”

      I think this line is bad news. I know he doesn’t use the word “coincidence” but it’s easy to read that line and think that’s basically what he is saying. “Unique historical occurrence” implies that it’s an anomaly that happened due to a ton of different factors nobody could have predicted and is incredibly unlikely to re-occur.

      I know that’s not really what he’s saying – but I think that’s how it can easily be interpreted by someone who is unfamiliar with the vast Austrian critique of the “standard” explanation for the Great Depression (that it happened because of robber barons and stock market speculation and Hoover did nothing).

      Referring to ANYTHING as a “unique historical occurrence” is anathema to any progressive – who is preconditioned to believe that absolutely everything can and should and presumably has been engineered by the state. One of their preconceived notions is that there must be a reason/purpose behind every historical occurrence. And another one of their preconceived notions is that the government always makes things better and never worse.

      • Bob Roddis says:

        To be clear, the part I’ve quoted is “Part IV” of the Stockman speech to which Scott Horton refers.

        1. What was unique was the number of countries employing central banks to create credit which financed and made possible the war which was followed by the number of countries which tried to put band-aids over the resulting monetary system until it imploded. Further, the system facilitated and continues to facilitate war and the collapse in 1929 was not due to the “free market”. Finally, the Keynesians never engage the argument that there was no market failure (or even allow university students or MSM viewers to know that alternative explanation even exists).

        2. Why do we care what the hysterical and false response of the Keynesians will be to what Stockman is saying? We’re never going to convince them anyway. The only hope is for us to educate average people on some very basic topics so that they will be properly appalled by the universal and unnecessary kleptocratic Keynesian system and where they know enough to see the absurdity and dishonesty of Keynesian arguments.

    • Lord Keynes says:

      The Great Depression was only quantitatively — not qualitatively — different from the severe periodic crises in modern capitalism.

      Similar disasters happened in the 1870s and 1890s.

      Australia in the 1890s had a depression very much like America’s great depression, yet Australia had no central bank, a gold standard, no capital controls, no branching restrictions on banks, virtually no regulation of banks and what little existed was ignored anyway, yet the result was still a depression very similar to America’s 1930s depression.

      • Bob Roddis says:

        It’s pointless to “debate” LK over and over on the same points. The earlier disasters were the type of “bad” FRB which induced the artificial and unsustainable distortion of prices far beyond that appropriate for the existing pool of savings. I’ve quoted this comment from John Quiggin here several times before about Australia’s adventure with FRB “free banking” on steroids:


        • Keshav Srinivasan says:

          Out if curiosity, do you believe that fractional reserve banking is immoral, even if all parties concerned have full knowledge of what’s going on?

          • Major_Freedom says:

            If the market process were unhampered, then such contracts could not be *universally* imposed as money by way of monopolists in arbitration regarding payment of debts in FRB notes as legally extinguishing those debts.

            The problem isn’t FRB, it’s the violence and deception associated with it.

            • Lord Keynes says:

              Nobody imposed FR banknotes on the private sector as money. You’re just making things up.

              Now I expect history can be anything you choose it to be, just like words can have any meaning you like? lol.

              • Major_Freedom says:


                “Nobody imposed FR banknotes on the private sector as money.”

                False. See legal tender laws that are imposed on everyone in the country.

              • LK says:

                Legal tender laws relate to high powered money, i.e., fiat money, not FR banknotes.

                [Edited by RPM.]

              • Major-Freedom says:

                It relates to both LK. The state’s courts will consider your debtor to have settled if they pay in FRB.

                You are uninformed of our legal tender laws.

          • Bob Roddis says:

            I do not think FRB is immoral “if all of the parties know what is going on”. However, I have a very high standard concerning what it means for “all parties to know what is going on” especially potential payees of FRB notes. I’m assuming that it’s possible for bankers and depositers to figure out and understand their strange relationship which is a separate issue.

          • Bob Roddis says:

            Whether some form of FRB is doable in some future society is pure speculation. If it’s ever tried, we will find out soon enough.

            What we can say is that the (always) historical examples provided by LK are situations where credit expansion in the form of loans and note issue (which average people cannot make) in excess of specie (and thus true savings) induce price increases and distortions that are unsustainable exactly as predicted by Austrian analysis. Those price increases make everyone think that everyone is richer than they really are. There is not really enough savings and wealth sitting around to “demand” all of the stuff being made for sale due to these price distortions. Reality will intrude at some point. What else is there to say on the topic for 15th time?

            • Lord Keynes says:

              “There is not really enough savings and wealth sitting around to “demand” all of the stuff being made for sale due to these price distortions”

              Only someone ignorant of real world production (e.g., excess capacity, buffer stocks, inventories), the non-existence of general equilibrium states, the extent of international trade, and the relatively inflexible nature of most prices and the irrelevance of market clearing prices would say such nonsense.

              • Keshav Srinivasan says:

                “the non-existence of general equilibrium states”. Lord Keynes, can you elaborate on this? People like Krugman talk in terms of general equilibrium all the time.

              • LK says:

                And mainstream neoclassical economics is wrong, given it is based on GE theory.

                Don’t you know about the non neoclassical, heterodox version of Keynesianism called Post Keynesian economics?

                Strange, I thought I’ve made it clear for years that is the economic tradition I draw on.

              • Keshav Srinivasan says:

                Lord Keynes, yes, you have made it abundantly clear that you’re a Post Keynesian. It’s just that I don’t know much about Post Keynesian economics. So can you enlighten me? Why don’t you believe that general equilibrium states exist?

              • Major-Freedom says:


                “Only someone ignorant of real world production (e.g., excess capacity, buffer stocks, inventories), the non-existence of general equilibrium states, the extent of international trade, and the relatively inflexible nature of most prices and the irrelevance of market clearing prices would say such nonsense.”

                False. Price distortions take place with coercive central bank activity with any quantity of goods sitting on store shelves.

                The tacit assumption you are relying on is the false notion that inflation affects idle resource spending and prices before it affects other spending and prices.

                In the real world, inflation affects more than just the prices of idle resources. It distorts prices of both idle goods and non-idle goods.

                Even if, for some miraculous reason, inflation only ever affected idle goods prices, then that would STILL distort prices and cause malinvestment.

                The non-existence of GE is irrelevent to distortions to economic calculations.

                And the concept of “relatively fixed prices” is meaningless, because price flexibility can be understood as anything when the comparison is your subjective whim.

              • Major-Freedom says:


                It is not true that distortions to economic calculations don”t take place as long as inflation affects the prices of idle resources.

                You are conflating “no price distortions as in the Austrian theory” with “modest price level increases.”

          • Bob Roddis says:

            The interesting associated topic that I don’t think we have yet to beat into the ground is LK’s belief in a benevolent and omnscient “regulator” who can rule over the FRB process and allegedly prevent problems. In fact, how does his “regulator” differ from my insistence upon each party in the transaction having a clear understanding of the process so there can be a “meeting of minds” necessary to form a non-fraudulent contract?

            • Lord Keynes says:

              There is no need for omniscience, any more than private law courts or private protection agencies in your Rothbardian fantasy world would have to “omniscient”.

              All that is needed is a properly designed regulatory framework, which is generally enforced. Just as you see in building codes or fire codes.

          • guest says:

            Fractional reserve banking doesn’t work as intended unless there are parties without full knowledge.

            If my purpose in storing commodity-money in a bank is to preserve a sufficient amount as is estimated (by me) to be required to afford the wealth that it is estimated (by me) to be able to purchase at the moment I choose to withdraw it,

            then it’s not in my interest to store it at a bank which effectively gives other customers claims (FR negotiable debt instruments) to my stored wealth; It could be gone before I can withdraw it.

            If I wanted the bank to make money off of my money, so as to maybe make interest off of it, I would lend to it, rather than hire it to warehouse my commodity-money:

            The Economics of Fractional Reserve Banking | Joseph T. Salerno

            • Lord Keynes says:

              Any bank contract you sign from any bank you care to name is legally a mutuum **loan** agreement, not a bailment.

              Just like many Austrians, you’re ignorant of modern banking, and the difference between bailment and mutuum.

              • guest says:

                As the Cyprus incident showed, *most people* are ignorant of the difference between bailment and mutuum.

                I think this bolsters my argument.

              • guest says:

                Just to have this on record:

                Real contracts in Roman law

                A mutuum was a loan for consumption.[1] … It involved the delivery of certain types of fungible goods, such as money, food, and drink. Ownership was transferred, as was possession.[1] In a strict sense then, because ownership passed, it should not be considered a loan.[7] The mutuum obliged the borrower not to return the thing itself, because its use would involve consumption, but a similar thing in quantity, quality and size.[1][5]

              • LK says:

                Just because people might be ignorant of the nature of the contract they sign, it does not follow the contract is fraud.

                The fact remains that all current account/transactions accounts bank accounts are mutuum loans.

                If some wikipedia page says mutuum is not a loan, then wikipedia is wrong.

                Mutuum is understood as a loan of a fungible good by virtually every reference work, legal work, and legal system you care to name:


              • Tel says:

                A contract requires a meeting of the minds.

              • guest says:

                Just because people might be ignorant of the nature of the contract they sign, it does not follow the contract is fraud.

                I think I’ve found a way to reach you, Lord Keynes.

                In your view, would prices in terms of fiat money lead entrepreneurs to invest in inherently unsustainable projects IF those entrepreneurs MISTAKENLY treated mutuums as bailments?

              • LK says:

                No, guest, time preference as an explanation of interest rates and loanable funds theory are wrong.

                The whole ABCT is wrong, so what you’re saying is false

              • Major-Freedom says:


                You haven’t shown how ABCT is totally wrong.

                And no, adding an “s” to every time “natural interest rate” is mentioned does not collapse the entire theory. If it did, then you adding “post” to Keynesianism would collapsethe entire Keynesian doctrine.

              • Major-Freedom says:

                guest, you nailed LK.

                That is why all he could reply with is “you’re wrong.”

          • Tel says:

            It’s an interesting question whether the depositors in the 1890’s knew the risks of banks with low reserves. Clearly many people did know, because government offered protection from liability, only on condition of maintaining high reserves (I’d have to check exactly how high, but much higher than modern banking). Those banks that chose to push beyond the government reserve limit also lost protection from liability and I believe many bank shareholders were made to pay back those deposits.

            LK also forgot to mention that the depression was preceded by a major gold rush, and much of the speculation was based on a belief that new gold will keep coming forever … which it didn’t. Thus, there was primary monetary inflation even on a gold standard, which can happen when suddenly new gold is discovered, but in all of human history there are only a handful of well known examples of this. There was also secondary monetary inflation caused by some banks pushing their reserve ratio.

            • LK says:

              “Clearly many people did know, because government offered protection from liability,”

              Where is your evidence for this? or did you just make this up?

              As for the gold rush, that does not refute anything I said.

              Commodity systems based on gold are vulnerable to such monetary inflations.

              But more importantly, a lot of the money in the Australia bubble simply came in via the capital account from foreign investors.

              Again, money inflows from overseas can cause bubbles in any Rothdardian system.

              The original claim that 1930s depressions cannot happen without central banks or in a commodity money system is just rubbish.

              • Tel says:


                In late 1816, the Bank of NSW was established as a privately owned bank. Macquarie granted the bank the privilege of limited liability, usually obtainable only by Royal Charter. If the proprietors had been prepared to establish the bank as a partnership with unlimited liability – the usual form of corporate structure at the time – no special charter would have been required. Macquarie believed that the proprietors would not risk subscribing to the bank without some guarantee against losing more than their subscribed capital if the bank were to fail (Holder 1970).

                Note: charter banking was where banking originated in Australia, and this was not free banking, it was very much a handshake agreement between government and financiers.

                Emphasis added by me, obviously.

              • Tel says:


                One change, from 1863 onwards, was the gradual amendment of colonial banking laws to make shareholders’ liability for the note issue unlimited (Butlin 1986: 92-3). Tasmania also started to tax the note issue in 1863 and the other colonies followed suit:

                The only purpose behind these levies was the raising of money… The usual rate, two per cent, was about half, or a little less, of what was generally accepted as the net profit on issue accruing to the banks. In time this was to make the banks dubious of the advantage of continuing note issue and readier to contemplate acceptance of government monopoly of issue. (Butlin 1986: 94)

                This period also saw the Treasury move towards eliminating the chartered banking system and the Treasury supervision that went with it (Butlin 1986: 89). Charters had been sought earlier because they were the only way to obtain the valuable privilege of limited liability, but a British act of 1862 had allowed banks access to limited liability without the need for a special charter. (The limited liability was qualified, however, in that it did not apply to note issue.) The Treasury then took the view that this Act provided all that was necessary, and that a special charter implies Treasury supervision and might be seen to imply some degree of government responsibility for a bank that had a charter. The Treasure therefore tended to refuse new charters and resist the renewal of existing ones.

                Of course, government responsibility for chartered banks was exactly the idea from the start of Australian banking! Anyhow, one way or another, many banks were moved onto unlimited shareholder liability and abandoned their charters.

                The same reference explains the rise of building societies, and other non-banking lenders.

              • Tel says:

                Commodity systems based on gold are vulnerable to such monetary inflations.

                So have great discoveries of gold happened more often or less often than reckless printing of paper money?

                Which is more likely in the future do you think?

              • LK says:

                Limited liability does not constitute deposit insurance or government protection of deposits, tel — which is what your original statement implied.

                Furthermore, not even unlimited liability would necessarily have protected depositors from loss!! — witness the loss of mutuum loans when any number of unlimited liability banks have failed

                The idea that the Australian bubble and depression was all the result of limited liability is preposterous.

                We can just see the desperation of people like you when confronted with reality: limited liability is in fact a ubiquitous feature of modern capitalism, especially those businesses that are set up as joint stock companies.

                If you do business with such a company and it owes you debt but fails, then you must accept the risk associated with doing such business.

                That government provides a legal framework for limited liability does not mean there is a “handshake agreement between government and financiers”.

              • LK says:

                Apart from which, if you really think limited liability was some disastrous evil causing the 1880s bubble,
                limited liability is, according to Rothbard, perfectly legitimate and straightforward in his hypothetical free market system:

                “On the purely free market, such individuals would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will transact business with it.”

                So in anarcho-capitalist paradise, you’re just as likely to have joint stock, limited liability banks form and be widespread as a form of banking.

                So much for this rubbish you’re peddling, tel.

              • Tel says:

                The Bank of NSW was indeed backed by the government. This was demonstrated twice, once in 1826 and again in 1828 both times Governor Darling gave substantial bailout loans out of the treasury. In both cases the Bank of NSW continued trading and repaid the bailout.

                Smaller charter banks were not so favourably treated, The Bank of Australia failed in 1843, and notes were initially repaid out of loans from other banks which were then (eventually) repaid by shareholders and by auction of the less liquid assets. At any rate, the government of the day ensured that depositors were protected, one way or another.

                In 1843 a run on the Savings Bank of NSW was brought under control by Governor Gipps offering government guarantee for loans they might require to get through the bad patch.

                Although there were quite a number of cases of banks being wound up at a loss to the shareholders, there were only very few where depositors or note holders made a loss.

              • LK says:

                “At any rate, the government of the day ensured that depositors were protected, one way or another.”

                False, tel, and proven false by the way large numbers of banks failed in the 1890s, with severe loss to depositors: over 54 banks failed in the early 1890s and most depositors lost all or most of their mutuum deposits (Francis Gordon Clarke, History of Australia, p. 81).

                And assuming those examples you cite really are true, they were rare, and occasional government loans to banks in trouble does not constitute general protection of all depositors by government.

              • Major-Freedom says:


                That is a ridiculously pedantic point. Not even Soviet Communism was total. There was still some black market activity.

                To claim that because some banks failed in Australia, it was “not government backed”, is to attribute an argument to your opponents that they don’t even believe, namely that a government backed banking system somehow necessarily implies that zero banks are left to fail. Government regulators play favorites, LK. It happened in the US 2008. The US banking system was and is indeed government backed, you would agree with this, and yet many banks failed or were bought out or were out into receivership during the financial crisis.

                Nobody claimed that a government backed banking system absolutely precludes bank failures.

                Tel’s well researched point is not that banks can’t fail when there is government backing. His point, which is true, is that Australia did NOT have the free banking system you have been suggesting it had. You are trying to claim that the problems that took place in 1800s in Australia are allegedly the result of free markets. That claim is falsified by the evidence Tel provided, which you hand wave at and ignore because it doesn’t fit your ideology and narrative.

        • Lord Keynes says:

          (1) Even if you think FR banking is the ultimate cause of recession that makes a nonsense of Stockman’s “unique historical occurrence” view of the great depression.

          (2) even if you think FR banking is a root cause of all cyclical fluctuations (it isn’t), you’ve never explained why it would disappear in anarcho-capitalist paradise without violent intervention.

          Negotiable debt instruments used as a medium of exchange are ubiquitous in modern market economies. That includes everything from negotiable bills of exchange, promissory notes, negotiable cheques — any negotiable debt, not just FR notes.

          • Bob Roddis says:

            1. What was unique was the level of funny money issuance by the central banks to fund WWI which DK describe so well in his paper. It’s the same type of problem we saw before simply on a larger scale. (And England suffered from “sticky” too high wages that were too high as the result of post WWI monetary policy and “sticky” due to the political power of the workers.) Stockman’s point was that the process funded and facilitated war and was not a market process. The wealth of average people is not seized and taxed in real time to pay for war and the connection between their poverty and war is lost on them.


            2. A voluntary community could simply ban the process contractually. Or “regulate” it contractual as they see fit. Severe punishments could be prescribed in advance for times FRB goes off the track. Try it and find out what happens. I’m sick of speculating.

            3. Your constant arguments about promissory notes etc…. are a straw man. Once money has been lent, if the lender and borrower can both still spend it (or the lender can lend it again), there will be a problem with distorted prices in excess of real savings.

          • Hank says:

            LK is very confused and muddled on this matter. Here is a resource that goes over this topic in detail:


        • Tel says:


          Some very interesting discussion of the 1890’s in Australia from the perspective of unions going on strike and the resulting productivity disruption. This happened in parallel with the banking crisis and a bust in property prices which had recently been booming.

          There was another parallel issue which was the rise of “building societies” offering a non-banking system, and imposing strong competition on the traditional trading backs. A lot of things were happening at the same time. Very likely the building societies contributed to the property boom and this non-banking sector offered no protection (shareholders and depositors were the same people) but obviously some people were willing to take that risk.

          At any rate, the story is a lot more complex than the simple minded claim that free banking leads to a depression.

      • Hank says:

        I may be wrong, but don’t gold rushes cause expansions in the money supply? If so, you ignore this factor.


  2. guest says:

    VERY good article about the description of what drowning ACTUALLY looks like.

  3. Major_Freedom says:

    I found myself instinctively holding my breath as I read this article.

  4. guest says:

    Off-topic, but … but … “Potpourri”!:

    [I take this back – it is accidentally related to the third from last topic in the list (“basics of the gold standard”, etc.).]

    Charles Plosser thinks there’s a ticking time bomb at the Fed

    “These reserves are not inflationary right now,” Plosser said in a meeting Tuesday with reporters in Washington.

    Yet if borrowing begins to surge and those reserves start to pour out of the banking system, Plosser worries, “that’s going to put pressure on inflation.” The result: the Fed could be forced to raise interest rates faster and earlier than it would like and perhaps slam the breaks on the economic recovery.

    The Fed tried to avoid such a problem in the past simply by not creating so much excess reserves in the first place. If the excess reserves did not exist, banks could not lend out too much money and trigger an inflationary spiral.

    [Plosser retires in 3 … 2 … 1 …]

    Looks like Plosser agrees with Peter Schiff (except for maybe the belief that inflation is already occurring but is being hidden):

    Stress Tests No Sweat

    Unless the Fed expects us to live with steadily increasing prices for basic goods and services, it will eventually be forced to allow interest rates to rise. However, if it does so, it will quickly bankrupt the US Treasury, the banking system, and any Americans left with flexible-rate debt.

    And he agrees with Jeffrey Tucker:

    Where is the hyperinflation?

    From talking with Shostak, Salerno, Murphy, and others, I think the answer is summed up in these charts. That is to say, it doesn’t matter how much the Fed fills the bank coffers if the banks aren’t lending money. The bitter irony is that economic “recovery” will mark the beginning of the inflationary disaster.

  5. David R. Henderson says:

    Great piece by Josiah Neeley. I hd missed this.

    • guest says:

      From the article:

      When he wasn’t worried about overpopulation, Holdren was worried about global cooling, claiming that pollution could push us into a “new ice age.” And when he wasn’t worried about global cooling, he was worried about global warming, suggesting that “carbon-dioxide climate-induced famines could kill as many as a billion people before the year 2020.”

      To avert this catastrophe, Holdren called for “a massive campaign… to de-develop the United States,” and for a program of “population control, limitation of material consumption, redistribution of wealth, transitions to technologies that are environmentally and socially less disruptive than today’s, and movement toward some kind of world government.”

      More about John Holdren (from July 16, 2009):

      Glenn Beck: Meet your Science Czar!

      Now, what has our new science czar done? Well, of course, the big scientific consensus during the Seventies was that overpopulation was going to destroy the Earth. So what was Holdren really thinking? What was he thinking back then? What was he saying? Quote, this is our new science czar, quote: Adding a sterilant to drinking water or staple foods is a suggestion that seems to horrify people more than most proposals for involuntary fertility control.

      So the ridiculous idea of our new science czar is not dismissed. It’s just not ready to go yet. I mean, it might hurt the livestock or the pets. Since that idea is just ridiculous, here’s another one he had. Quote: Of course, a government might require only implantation of a contraceptive capsule.

      But it gets worse. Quote from our new science czar: Responsible parenthood ought to be encouraged and illegitimate child bearing should be strongly discouraged. One way to carry out this disapproval might be to insist that all illegitimate babies be put up for adoption, especially those born to minors who generally are not capable of caring properly for a child alone. It would be even it would even be possible to require pregnant single women to marry or have an abortion perhaps as an alternative to placement for adoption depending on the society.

  6. Josiah says:

    It almost makes me forgive Josiah for temporarily blogging at Noah Smith’s site.

    Almost. 🙂

  7. somebody says:

    Bob, do y’all have any DVDs of past Nights of Clarity for sale?

    • Bob Murphy says:

      Nah, sorry. There’s this

      • Keshav Srinivasan says:

        Is there a reason the full videos aren’t online? Is it just to incentivize people to come in person?

        • Bob Murphy says:

          I don’t know if we even have the full videos for each person. We had a camera crew that was there to make the memorial video.

  8. Tel says:

    Jumping to the wider portion of the page, I’ll post a big quote which I happen to find fascinating (and perhaps comforting) because it demonstrates just how little has changed. By the way, “Queensland” is like an Australian version of Florida.

    Queensland also proposed legislation for government note issue. The aim was not so much to ease financial crisis, which was mild compared to Victoria and NSW’s experience, as to tap an easy source of finance for the government (Butlin 1961a). The Queensland National Bank, the Bank of North Queensland and the Royal Bank of Queensland suspended payment within three days of each other in mid May 1893. These three banks accounted for just over half of Queensland banking assets (and around 8 per cent of Australian banking assets). The Queensland Savings Bank survived a brief run. In Queensland, bank notes were not a first charge on assets. As a result, the surviving banks would not immediately accept notes issued by the suspended banks. This generated a brief liquidity squeeze.

    The Queensland Government’s response to these events included three measures. First, bank notes became the first charge on assets. Second, following the example set by NSW, the government passed legislation authorising the Treasury to make advances secured against deposits in banks that had suspended payment (Teare 1925). The third, and most substantial step, which drew from Queensland’s experience in the 1860s, was the introduction of a government note issue. In Queensland, Treasury notes were supplied to banks that paid 25 per cent of the notes’ face value in gold. The notes were declared legal tender. A government monopoly over note issue was established by increasing the tax on private bank note issues from 3 per cent to 10 per cent (Mackay 1931).

    Strong links between the Queensland National Bank and members of the Queensland Parliament saw the bank receive considerable government support throughout the 1890s, well after the broader financial crisis had passed. Thomas McIlwrath was a member of the bank’s board for five years before becoming Premier in 1879. The same year the bank was awarded all of the Queensland Government’s business. In April 1892, the proceeds of Queensland Government loans raised in London were used to meet depositor withdrawals from the bank. A run by Scottish depositors in May 1893 prompted the bank to suspend repayment and reconstruct. The government auditor inspected the books and reported that the bank was definitely solvent. The government therefore agreed to a scheme of reconstruction, which locked up £2 million of its deposits (which accounted for around one-fifth of the bank’s total deposits) for between 6 and 12 years.

    During 1894 and 1895, the bank’s losses were concealed by accounting fraud. In 1897, a government-appointed committee investigated the bank and found it to be deeply insolvent. The committee did not, however, recommend liquidation, as it believed that the best return to creditors could be achieved by keeping the bank open. Realising that publication of the committee’s report would precipitate a run on the bank, the government passed the Queensland National Bank Limited Guarantee Act, which guaranteed all deposits for a year. Under the second scheme of reconstruction, the government’s deposits were to be repaid from the bank’s profits in stages between 1897 and 1921. In the event, the government was fully repaid in 1918 (Blainey 1958).


    A number of points from this:
    * reserves in gold of 25% face value were considered reasonable (i.e. money multiplier of 4).
    * government wanted from the outset to get a monopoly on issue of notes, and eventually achieved it by just imposing a tax on any private competitors.
    * government was always involved in banking, sometimes at a “personal” level.
    * government was perfectly happy to misinform the public where this was deemed useful at the time.
    * depositors did eventually get paid, and government loans did get paid back.

    Compare with the modern situation:
    * gold reserves are essentially zero or close to it, the money multiplier is much larger than 4.
    * government has taken a monopoly on issue of notes and outright banned private competition.
    * there is still a strong link at the personal level between bankers and key government decision makers.
    * government will happily keep data secret from the public when convenient to do so.
    * depositors mostly get paid, by dint of simple money printing.

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