Bitcoin and the Theory of Money
The latest installment in my series on Money Mechanics for mises.org.
BMS ep 117: Responding to Recent Economic Fallacies
Plus I give my thoughts on the labor market. Link here.
Another NYC Dr Talks About covid-19
This is interesting, especially how he says he felt the specialists were mistreating in the beginning.
Why the Current Unemployment Is Worse Than the Great Depression
My latest as mises.org. The key point:
However, besides this technical issue, there is a much more fundamental difference between unemployment in the early 1930s and today: back then, the people out of work had been laid off. Yet today, the people out of work are in lockdown.
This is an enormous distinction. When the economy crashed following the stock market in 1929, consumers restricted their spending according to their preferences as to what was most expendable. Some businesses went under completely—and these were the businesses that were the least important, according to their customers.
At the same time, plenty of other businesses remained afloat, but they cut back their workforces. Again, businesses laid off the most expendable workers, as judged by the managers/owners.
Intuitively, during the Great Depression (and any other standard recession, for that matter), the economic system sheds those jobs that are the least important, in order to gradually reallocate workers into niches that are more appropriate. The deeper the malinvestments have been during the boom phase, the more workers will find themselves in unsustainable outlets when the crash occurs. But given the fact that X-percent of the jobs need to disappear, the market economy during a normal downturn sheds them in the most economical areas, causing as little disruption to the flow of goods and services as judged by the consumers.
In complete contrast, today the principal criteria for which 20+ percent of current workers have lost their jobs are (1) they don’t work in an occupation that can be done from home and (2) they aren’t deemed “essential” by government officials. Naturally, these criteria don’t come close to approximating what is the most economical way to shed jobs, from the perspective of consumers.
Was Jesus Quarantined?
On Twitter, Jeff Tucker asked me to review his recent article using Jesus’ healing of a leper to comment on our current crisis. Let me summarize my two main reactions, and then elaborate on them:
- Contrary to the title of Jeff’s article, I actually don’t think the Bible account is saying Jesus was put into quarantine.
- I understand where Jeff is coming from about the authorities using fear to manipulate people etc., but the vibe I was getting from his commentary rubbed me the wrong way. He doesn’t literally come out and say it, but I got the sense from Jeff’s discussion that anybody who is being really careful about staying away from people who might be carrying the coronavirus, is acting in a judgmental/reactionary manner. And since I’ve been telling people how my (very vulnerable) wife and I have adopted extreme measures of caution, this type of reaction rubbed me the wrong way.
Now to elaborate:
Let me confess that at first, I thought Jeff was right, that Jesus had been banned from cities because people feared He had contracted leprosy, and it blew my mind. Here is the ESV of Mark 1: 40-45:
Jesus Cleanses a Leper
40 And a leper[h] came to him, imploring him, and kneeling said to him, “If you will, you can make me clean.” 41 Moved with pity, he stretched out his hand and touched him and said to him, “I will; be clean.” 42 And immediately the leprosy left him, and he was made clean. 43 And Jesus[i] sternly charged him and sent him away at once, 44 and said to him, “See that you say nothing to anyone, but go, show yourself to the priest and offer for your cleansing what Moses commanded, for a proof to them.” 45 But he went out and began to talk freely about it, and to spread the news, so that Jesus could no longer openly enter a town, but was out in desolate places, and people were coming to him from every quarter.
So like I said, at first this blew my mind, because it had never occurred to me that perhaps people were afraid that Jesus had become diseased Himself.
However, upon further review, the interpretation I had always given this passage, still seems to be correct to me. For one thing, there are other examples where Jesus performs a miracle, and instructs the beneficiary to keep quiet about it. E.g. Mark 7:
Jesus Heals a Deaf Man
31 Then he returned from the region of Tyre and went through Sidon to the Sea of Galilee, in the region of the Decapolis. 32 And they brought to him a man who was deaf and had a speech impediment, and they begged him to lay his hand on him. 33 And taking him aside from the crowd privately, he put his fingers into his ears, and after spitting touched his tongue. 34 And looking up to heaven, he sighed and said to him, “Ephphatha,” that is, “Be opened.” 35 And his ears were opened, his tongue was released, and he spoke plainly. 36 And Jesus[h] charged them to tell no one. But the more he charged them, the more zealously they proclaimed it. 37 And they were astonished beyond measure, saying, “He has done all things well. He even makes the deaf hear and the mute speak.”
And from Luke 8:
Jesus Heals a Woman and Jairus’s Daughter
40 Now when Jesus returned, the crowd welcomed him, for they were all waiting for him. 41 And there came a man named Jairus, who was a ruler of the synagogue. And falling at Jesus’ feet, he implored him to come to his house, 42 for he had an only daughter, about twelve years of age, and she was dying.
As Jesus went, the people pressed around him. 43 And there was a woman who had had a discharge of blood for twelve years, and though she had spent all her living on physicians,[f] she could not be healed by anyone. 44 She came up behind him and touched the fringe of his garment, and immediately her discharge of blood ceased. 45 And Jesus said, “Who was it that touched me?” When all denied it, Peter[g] said, “Master, the crowds surround you and are pressing in on you!” 46 But Jesus said, “Someone touched me, for I perceive that power has gone out from me.” 47 And when the woman saw that she was not hidden, she came trembling, and falling down before him declared in the presence of all the people why she had touched him, and how she had been immediately healed. 48 And he said to her, “Daughter, your faith has made you well; go in peace.”
49 While he was still speaking, someone from the ruler’s house came and said, “Your daughter is dead; do not trouble the Teacher any more.” 50 But Jesus on hearing this answered him, “Do not fear; only believe, and she will be well.” 51 And when he came to the house, he allowed no one to enter with him, except Peter and John and James, and the father and mother of the child. 52 And all were weeping and mourning for her, but he said, “Do not weep, for she is not dead but sleeping.” 53 And they laughed at him, knowing that she was dead. 54 But taking her by the hand he called, saying, “Child, arise.” 55 And her spirit returned, and she got up at once. And he directed that something should be given her to eat. 56 And her parents were amazed, but he charged them to tell no one what had happened.
So the fact that Jesus also instructed the leper (in Mark 1) to tell no one, shouldn’t necessarily make us think Jesus didn’t want to be ostracized (as Jeff interprets it). This is a standard thing for Jesus when He heals people.
For additional support, I looked up Mark 1 in three different commentaries. None of them explicitly had Jeff’s interpretation. Two of them didn’t really help confirm or reject Jeff’s interpretation one way or the other, but one of them–Matthew Henry’s–clearly spelled out what I had always thought was going on here:
[The cured leper] must not proclaim it, because that would much increase the crowd that followed Christ, which he [i.e. Jesus] thought was too great already; not as if he were unwilling to do good to all, to as many as came; but he would do it with as little noise as might be, would have no offence given to the government, no disturbance of the public peace, not any thing done that looked like ostentation, or an affecting of popular applause. What to think of the leper’s publishing it, and blazing it abroad, I know not; the concealment of the good characters and good works of good men better become them than their friends; nor are we always bound by the modest commands of humble men. The leper ought to have observed his orders; yet, no doubt, it was with a good design that he proclaimed the cure, and it had no other ill effect than that it increased the multitudes which followed Christ, to that degree, that he could no more openly enter into the city; not upon the account of persecution (there was no danger of that yet,) but because the crowd was so great, that the streets would not hold them, which obliged him to go into desert places, to a mountainch. 3:13 ), to the sea-side,ch. 4:1 .
So according to Henry, when the former leper told everyone what Jesus had done, there were such throngs that wanted to see Him, He couldn’t even enter any towns. He had to retreat to desolate places, and still the crowds sought Him out. (For what it’s worth, this website also says the same thing, though it admits the Bible doesn’t tell us exactly why Jesus so instructed the leper.)
Second, turning to Jeff’s commentary on American society’s reaction to the coronavirus, I’ll excerpt some of it below, to explain my reaction:
Most of us didn’t realize, until very recently, what a remarkable stain is put upon a person (or whole people) said to be diseased. Even people who have had the coronavirus and recovered (as 99% do) are right now regarded as suspect and treated as we imagine lepers were in the old days.
The biases have been unreal, and the policies based on those actions extreme. It began with banning flights from China, and then Europe, UK, and Australia, forcing chaos and social closening in airports all over the country. Then the separationism came home. State borders closed. Then it got even closer to home. Next town? Stay out. Next block? Stay away. Next door in my apartment complex? Stay away from my front door. Not even spouses and children are safe. Everyone stay away from everyone else and douse yourself constantly with a cleansing agent.
…
When you look at the incredible fear, paranoia, and loathing that the coronavirus has unleashed, you get a glimpse of what must have been a long-time human habit of suspecting others of passing on diseases. There is a remarkable power in that, especially if it only amounts to suspicion, rumor, bias, and smear, and it would naturally affect people who are different in other ways: foreign, different language, different social class, a different income group.
…
Then as now, the appearance of pandemic is a perfect mechanism for turning people against each other, and for power to grow, with shocking results. It will forever be etched in the annals of history that in 2020 Christians themselves were banned from their churches all over the world – on Easter Sunday – for fear of disease.
…
Once there is a rumor of disease, everyone is a suspect. If the suspicion falls upon any person, it was difficult to escape. People talk. People fear. They want that person out of sight and out of mind. Then as now. Especially without testing!
…
Next thing you know, “Jesus could no more openly enter into the city, but was without in desert places.” Yes, you know how this works. You got near a corona person who is probably that because he was near a corona person, and then that person got near you and now you are suddenly suspected. To the 14-day quarantine for you buddy!
This is fully consistent with everything we know about Jesus’s ministry. The parables and his life narrative are full of stories of breaking down biases, barriers, myths, and artificial walls of tribes, religion, class, gender, and political loyalty. …
Our times have reminded us that being called diseased is like other forms of social division that drive people apart and make them more dependent on power. It leads people to fear, hate, and separate. Jesus too not only addressed that topic; he lived it, even at the penalty of personal quarantine.
I daresay that someone reading this could be forgiven for thinking that the worry over the coronavirus is completely made up, and that if you put on a mask and avoid going to the store right now, you’re just like people who opposed interracial marriage in the 1970s or who didn’t trust Arabs after 9/11.
It will place my remarks in context if I mention that of course Jeff’s article isn’t unique in this; there are lots of libertarians posting memes suggesting that the people wearing masks right now are bootlickers who just do what the CDC tells them. (Of course, the CDC was telling us not to wear masks just a few weeks ago, so my household were rebels before it was cool. When we were in the hospital to deliver the baby, one of the doctors said to us, “Where’d you guys get those N95 masks? Are you health care workers?” No we’re an-caps my man, and I don’t want my wife to die.)
Jeff is obviously correct that the media is exaggerating the threat from the coronavirus, and of course the predictions about the # of deaths have been wildly off. Every time I have discussed this topic, I have given the standard disclaimer that government coercion is not justified, even if the threat were as bad as some of the epidemiologists warned.
Nonetheless, Jeff asked me for my reaction to his piece, and so there it is. I have seen a lot of libertarians mocking people–e.g. for wearing a mask in your own car, which makes perfect sense for various scenarios–who don’t deserve it. I realize I have a special personal stake in this, and probably my smug stuff I wrote after 9/11 when I was still a grad student would have rubbed the families of WTC victims the wrong way. So I’m not writing this current post to make anybody feel bad or to cast judgement, I’m just pointing out that this particular coronavirus episode has really opened my eyes to how “regular people” perceive libertarians.
BMS ep. 116: A Libertarian NYC Doctor Explains the Physiology of the Coronavirus
Before I jump into my podcast episode, let me mention: This is an old SlateStarCodex post on “conflict vs. mistake theory,” that I thought was very illuminating.
Now then: My most recent podcast episode is the last I’ll do on the medical aspect of the coronavirus. It fell into my lap; this doctor (a pathologist working in NYC hospitals) is a fan of Contra Krugman, and he understands the problems (both in practice and philosophically) with coercive lockdowns. However, he thinks it’s wrong to view the coronavirus as “just like the flu.”
This was a very informative interview, in terms of understanding what this thing actually does to you, and why it can be so fatal for certain people.
At the end, Dr. Machado talks about practical tips to stay healthy.
Do the Econ Textbooks Get Money & Banking Backwards?
The latest installment in my series on Understanding Money Mechanics for the Mises Institute. Once I dove into this one, the solutions seemed pretty obvious. Tell me what you folks think. An excerpt:
In chapter 5 we reviewed the textbook analysis of how a central bank buys government debt in “open market operations” to add reserves to the banking system, with which commercial banks can then advance loans to their own customers. In this respect we merely summarized the textbook explanation that economists have given for decades. However, over the years a chorus of critics has alleged that this orthodox view is, if anything, backwards, and that in reality commercial banks take the lead in making loans without regard to their reserves.
In order to have a concrete example of this rival perspective, we will draw on a 2014 report issued by the Bank of England entitled “Money Creation in the Modern Economy.”1 Coming from the UK’s central bank—their counterpart to the United States’s Federal Reserve—this is an authoritative example of the critique of the orthodox explanation for money and banking.
For our purposes in the present volume, we will select three of the alleged “myths” of money creation that the Bank of England report seeks to correct. (The serious student should of course read the original report for a full understanding of the challenge.) Our goal here is neither to affirm the orthodox explanation nor to concede its defeat, but rather to use the Bank of England’s commentary as a springboard for ensuring that current readers truly understand how central banks and commercial banks work together in a fiat-based system to create money.
Bob Murphy Show Double Header on the Coronavirus
My interview with Dave Smith, and then my solo episode giving some toilet paper analysis–I am the whole package–but more important, some practical tips that our household has adopted to stay safe.
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