The evidence that Alan Greenspan was not only a disciple of Ayn Rand but also a goldbug.
Stephen Williamson: New Monetarist Economics
Alan Greenspan and the Gold Standard
Stephen Williamson
(h/t Mark Thoma)
Here's an excerpt from [Greennspan's] "Gold and Economic Freedom":
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
You could put those two paragraphs in Ron Paul's "End the Fed," and no one would notice.Just as we hear it over and over from our Rothbardian-Libertarian friends. And, yes, Greenspan credits Rothbard, too.
What's the mystery? Greenspan wrote this gold stuff back in the 1960s when he was hanging around with Rand. It was in some Rand book I got for 25 cents in 1973. None of it seemed to impact his behavior once he became a government adviser or Fed Chairman. Wasn't he the WIN (Whip Inflation Now) guy under Ford? As if inflation was some mysterious force of nature?
ReplyDeleteAs always, you guys are desperate for some angle that avoids directly engaging Austrian concepts and analysis. Give up.
Did you click on the link, Bob. Greenspan reiterated his view in 2007. Presumably, he never changed his mind in between.
ReplyDeleteThe bottom line question is whether the chief function of money is preserve value, e.g, to promote savings (wealth) and preserve its nominal value, or to create value, e.g., by optimizing a monetary economic system through optimal flow and stock management that enhances the use of financial resources to generate real resources and their distribution throughout the system.
ReplyDelete1. I thought I just said: None of it seemed to impact his behavior once he became a government adviser or Fed Chairman.
ReplyDelete2. The most important function of money is to preserve its exchange value which allows for informed economic calculation which leads to a more informed use of scarce resources and wealth creation for all. Fiat funny money dilution distorts that process and leads to theft of purchasing power by the financial elite and the boom/bust cycle and poverty.
General price inflation may come later as a secondary effect.
Rothbard’s book on the depression very specifically argued that the 1920s was a time of massive monetary growth unbacked by gold. It was this nearly invisible monetary inflation, Rothbard argued, that eventually led to the boom-bust cycle that resulted in the Great Depression.
You can read Rothbard’s book at the Mises Institute’s website here.
http://www.cnbc.com/id/48806186/The_Gold_Standard_and_the_Myth_of_Price_Stability
Thus, money dilution may result in very little if any general price inflation while still causing serious problems. Please explain that to Mike Norman who seems impervious to that simple explanation.
Those who want to store their savings in the form of gold can do so. You can click on bullionvault and buy some physical gold. Those that did that a few years ago made a good decision. Why would you keep your savings as a bank deposit or as cash if you were really worried about inflation?
ReplyDelete"...as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or... "
ReplyDeleteHere they are again.
The three elements from column 11 of the Periodic Table, all showing up on cue in harmony and proposed as intermediating mediums of exchange between humans by their dupes among us....
All having their outer most d-bands full of electrons .... coincidence?
Looks like pass the tinfoil hat over to Greenspan.
"The most important function of money is to preserve its exchange value..."
ReplyDeleteI thought you were in favour of deflation? Deflation involves a CHANGE in the exchange value.
MMT policies target price stability.
"...which allows for informed economic calculation..."
Deflation changes prices. Why, in your theory, doesn't deflation "distort economic calculation"?
...a more informed use of scarce resources..."
Again, deflation changes prices. Why does this change lead to a more "informed" use of resources? What do you mean by "informed"?
"...wealth creation for all..."
Deflation involves falling wages for workers. Deflation increases the financial wealth of the wealthiest without them having to do anything. Deflation is commonly accompanied by recession or depression and unemployment. How is that wealth creation for all?
"Fiat funny money dilution distorts that process..."
Your ideal process sounds pretty "distorted" to me.
"...and leads to theft of purchasing power by the financial elite..."
Occupy Wall Street. Banks have been creating money and gaming the system for hundreds of years.
MMTers advocate wholesale banking/financial reform.
"...and the boom/bust cycle..."
Banking/financial reform and other MMT policies would stop financial boom/bust cycles.
"...and poverty..."
MMT policies aim for full employment, decent living and working standards for all.
When the world was last on a pure metal specie money system the vast majority of people lived in poverty and couldn't read or write.
MMT policies target price stability.
ReplyDelete"...which allows for informed economic calculation..."
There is really no such thing as "price stability" and no one should be "targeting" "price stability". Value is purely subjective and the terms of trade should always be up to the parties to each transaction. "Targeting price stability" interferes with the formation of the terms of trade between voluntary participants which is the very nature of the impairment of economic calculation. Should there have been enforced "price stability" when suddenly in 1980, men stopped wearing and buying bell bottom pants? When the price of Vanilla Ice CDs collapsed? You guys don't even know what it is you are talking about. Your silly models become your reality.
I thought I just linked to John Carney explaining "the myth of price stability".
http://www.cnbc.com/id/48806186/The_Gold_Standard_and_the_Myth_of_Price_Stability
The dispute comes about because libertarians and Austrian trust that average people can manage their own economic affairs. "Progressives" like MMTers think average people are fools and require "The Economics of Control" from "enlightened" omniscient bureaucrats (like themselves) enforced by SWAT teams and criminal sanctions. Arguing about minutiae with such people and their "plan of control" is pointless.
My question is how a well-known Ayn Rand acolyte and goldbug became head of the Federal Reserve, was reappointed, and came to be considered a wizard of finance. It beggars belief. A novel with such an implausible scenario would never have been considered for publication by a reputable publisher if it managed to make through the editorial process.
ReplyDelete"I thought I just linked to John Carney explaining "the myth of price stability"."
ReplyDeleteWow. A link to John Carney and the universe is explained.
What if John Carney's analysis of the facts doesn't mesh with that of others that think for themselves?
Bob Roddis said:
ReplyDelete"2. The most important function of money is to preserve its exchange value which allows for informed economic calculation which leads to a more informed use of scarce resources and wealth creation for all."
I think this is wrong.
Is there room in your anarcho-capitalist utopia for people like me who disagree or are we free to starve if we don't want to pay tribute to the already rich.
In a democracy, dilution is precisely the point of fiat money. Otherwise you're left with one of the following:
Pay vig to people who already have money.
Confiscate from the people who already have money.
Abandon the notion that you have a democracy.
> In a democracy, dilution is precisely the point of fiat money.
ReplyDeleteAnd how's this working out so far? Last time I checked, new fiat only enters the system with open market operations. Unless you're one of the people who first get the money from Fed purchases, you're out of luck.
How word would you use to describe the current state of affairs in which the fiat issuer (the Fed) is propping up asset prices (owned by a small fraction of the population) and pushing down yields on government bonds (used to finance the most politically connected)?
Ironic?
Sorry... "What word..."
ReplyDeletenew fiat only enters the system with open market operations
ReplyDeleteYou seem be under the illusion that govt has to borrow from the private sector to spend when that is not the case. Govt deficit spending is the only way that non-govt net financial assets increases. Assets swaps by the Fed do not alter the sum of non-govt NFA. Do the accounting.
marris said:
ReplyDelete"And how's this working out so far?"
Not very well for most people, but it's a political system / corruption problem and not a money system problem. The new money could be put to first use by people who actually need it.
I'm not clear on how changing the money system to one that further constrains democracy would fix the political problem. Can you explain it to me?
Quote from Slavist Bob Roddis: "The dispute comes about because libertarians and Austrian trust that average people can manage their own economic affairs. "Progressives" like MMTers think average people are fools and require "The Economics of Control" from "enlightened" omniscient bureaucrats (like themselves) enforced by SWAT teams and criminal sanctions."
ReplyDeleteBob is lier without morals. He doesn't believe a word he is saying.
Bob doesn't believe that most people can handle their own economic affairs at all.
See Bob's reasons for being against FR Banking is based on the argument that most people are fools can't understand credit contracts which why he wants to use SWAT teams to ban the use of FRB and force everyone to use "honest JP Morgan gold."
Look at the Austrian argument against worker's Unions. It claims that workers join unions because they are economically ignorant.
Ever Austrian that I've had the displeasure of a discussion with is always going on about how ignorant people are for wanting to live in society that relies "collectivist," "democratic," "statist" institution that is based on "economic ignorance."
If the "market" gives people correct information then why doesn't it do so in the "Austrian world" for current market driven politics?
The problem that Bob believes that most that average people can manage their own in economic affairs in isolation because he believe they are acting in a perfect world of apolitical non-violence based on Libertarian principles except when they do something he doesn't like ideologically.
The real world doesn't have any libertarian principles human behavior at all and thus and people form political unions and social collectives to protect their interest in ways that a individual cannot.
Bob and "free market" schools wants to use violence against workers and nations who wish to voluntary make political unions against institutions of oligrachical control by claiming that defending yourself against such institutional aggression and political power is "aggression" against his imaginary perfect world.
Bob promotes this intellectual violence and fraud against his own economic interest having been completely brainwashed by the rhetoric of plutocratic institutions such of the Von Mises Institute.
So Bob by constantly promoting a fraudulent framing of the political discussion has proven that enough stupid people like himself can't manage their own economic affairs when it comes to economy of own political actions.
He is a walking, blogging example of "What's Wrong with Kansas" that is constantly biting the hand that trying to defend him from the looters and pirates who use the cover of "free markets" and "free trade."
See Bob's reasons for being against FR Banking is based on the argument that most people are fools can't understand credit contracts which why he wants to use SWAT teams to ban the use of FRB
ReplyDeleteI worry about people who might not realize that when they are accepting a note that says "The bearer is entitled on demand to $x of specie" and the specie might not really be there, such people might be the victims of fraud. If there is no meeting of the minds, there cannot be a contract. If there is a meeting of the minds, there is a contract. I don't plan on banning any commercial practice unless third parties are physically harmed. If parties to a contract are defrauded, they have a cause of action for fraud.
It would just kill Septeus7 to understand the basic concepts of contracts, fraud, private property and the prohibition on the initiation of force (the stuff we at present all deal with every day of our lives).
Quote from Bob: "I worry about people who might not realize that when they are accepting a note that says "The bearer is entitled on demand to $x of specie" and the specie might not really be there, such people might be the victims of fraud."
ReplyDeleteWho the hells care about "specie?" Specie is a just another commodity. So selling gift card when you might run out of supplies should be considered fraud? You just claimed all futures contract are fraud! You have no understand of the meaning of the word fraud.
Quote: "If there is no meeting of the minds, there cannot be a contract. If there is a meeting of the minds, there is a contract. I don't plan on banning any commercial practice unless third parties are physically harmed. If parties to a contract are defrauded, they have a cause of action for fraud."
You even read what you write? If you don't plan on banning a business unless there's physical violence is done then you are saying that you aren't going to do anything about fraud or theft.
Contract fraud doesn't involve physical violence or harm nor a failure on the "meeting of the minds." Fraud also called a "Confidence Game" depends on a "meeting of the minds." I'm part of entire industry that depends of making people voluntary choose against their better interests.
And none of this has anything to do with FRB or why Austrian think that unionization of workers proves that worker's don't understand their true interest.
Quote: "It would just kill Septeus7 to understand the basic concepts of contracts, fraud, private property and the prohibition on the initiation of force (the stuff we at present all deal with every day of our lives)."
You're right that such concepts could probably kill me in the coming future as humanity slips into slavertarian (free market in humans) system helped out by genocide protecting scum like you.
Many Native American were butchered by apologist of "contracts", private property, and prohibition against initiation of force against the White Man before they understood those concepts.
I understand all those issues better than any Austrian schooler live or dead ever has. Until you have faced the violent enforce of property rights on your person you do not understand the cruel concept of property.
There is no prohibition of initiation of force because such a belief is most evidently false as the whole nature consist of "initiation of force" by one species against each other.
The claims of "initiation" versus retaliation is always a disputed political claim. You can't start you economic theory with the assumption that no one make disputed claims and nor can you apriori claim perfect knowledge that any particular act is in fact "initiation" or a "retaliation" or the excessive or deficient qualities of said action consist a just action.
The principle of "non initiation of violence" is in direct contradiction with the principle of subjective valuation. The perceived knowledge of initiation of violence is a value judgment. The principle of "non initiation" assumes that the "perception of initiation of force" is matter of objective fact when in reality it a perceived value. You therefore cannot claim that all value is subjective but that the knowledge of initiation of force is objectively known and one can therefore apriori assign human behavior into a digital praxeology of initiations of force (bad) versus versus voluntary actions (good).
Austrian so-called first principles are an absolute farce and a joke to anyone with an IQ above room temperature.
Only children and Libertarians believe in such simplistic illogical drivel.
Murray Rothbard denied the holocaust and his works have proven to contain factual errors in them. I was debating to Robert Murphy's blog and brought up his holocaust denial, and someone merely said he only denied the "well known exaggerations" of the holocaust. I asked what these were, and Robert Murphy stopped the discussion.
ReplyDeleteIf there is someone who deserves less attention than holocaust deniers, I'd like to hear it. (Coincidentally, some of his followers were members of groups who denied the holocaust.)
--successfulbuild
Bob,
ReplyDeleteI think the problem with your argument is that you assume some sort of free-market private-issuance money system would necessarily make nominal prices reflect some sort of 'real' value.
The problem with this argument is that 'free markets' don't produce prices in this way. 'Free markets' involve people taking risks, speculating, making promises that they might not be able to keep, etc. This leads to cycles of euphoric optimism, in which everything is going 'up', followed by 'busts'.
You can't call 'credit creation' fraud because those that engage in it generally know that they are taking a risk. Banks and other financial institutions are not bullion warehouses. They exist to leverage assets and provide returns to their investors and depositors. This in itself involves risk taking behaviour - i.e. the creation of loans which might not be paid back.
A totally strict metal specie system, if it could be rigorously enforced (which is doubtful) could, in theory, reduce volatility in markets. But at the same time it would greatly restrict the expansion of productive activity which is what capitalism is celebrated for.
Rather than delivering your imagined utopia, it could quite easily lead instead to a sort of 17th century style economy, with relatively low growth, high-inequality, and high levels of poverty and warfare.
"Price stability" doesn't mean that individual prices never change, it simply means that in general the path of inflation (or deflation, or neither) is reasonably predictable, so people can make plans without everything being screwed up by sudden changes in the general price level. This is precisely what gold standard systems were supposed to achieve, but in practice they could only achieve long-term price stabilty through very high levels of short-term price volatility, which lead to boom-bust cycles, unemployment, poverty, and all the rest.
ReplyDelete