The Austrian Theory of Money — Murray N. Rothbard

The Austrian theory of money virtually begins and ends with Ludwig von Mises's monumental Theory of Money and Credit, published in 1912.1 Mises's fundamental accomplishment was to take the theory of marginal utility, built up by Austrian economists and other marginalists as the explanation for consumer demand and market price, and apply it to the demand for and the value, or the price, of money. No longer did the theory of money need to be separated from the general economic theory of individual action and utility, of supply, demand, and price; no longer did monetary theory have to suffer isolation in a context of "velocities of circulation," "price levels," and "equations of exchange."...

Mises Daily
The Austrian Theory of Money
Murray N. Rothbard
Originally delivered as a lecture at the 1974 South Royalton Conference on Austrian Economics. Published in Economic Controversies.

Jason Smith — Money is the aether of macroeconomics

So I've never really understood Modern Monetary Theory (MMT). In some sense, I can understand it as a counter to the damaging "household budget" and "hard money" views of government finances. To me, it still cedes the equally damaging "money is all-important" message of monetarism and so-called Austrian school that manifests even today when a "very serious person" tells you it's really the Fed, not Congress or the President that controls the path of the economy and inflation when neither inflation nor recessions are well-understood in academic macroeconomics. People have a hard time giving up talking about money...

Information Transfer Economics
Money is the aether of macroeconomics
Jason Smith

Mish — Bitcoin vs Dollars: Which One is a Fraud? Which One is a Ponzi Scheme?

MMT Foolishness: Modern Monetary Theory (MMT) suggests that debt does not matter and governments can print at will creating a virtual utopia of constant growth. MMT, Keynesian, and Monetarism all suffer from the same fatal flaw: They promise something for nothing, in various ways.

For discussion, please see Debunking MMT, Keynesianism, Monetarism: Reader asks “What theories do you believe?” Mish Reading List.

Those who believe in the absurdity that a benevolent government would spend the money wisely, cancel all the debt or pay interest to itself and everyone will essentially live happily ever after, seriously needs to investigate my reading list.

By the way, MMT cannot possibly be correct for a reason I have not heard anyone else state: It’s based on fraud.

Mish continues to display arrogant ignorance. He is actually a pretty savvy guy in other ways. I used to read him and assumed that he would overcome his Austrian bias eventually and grok MMT. Nope.

Bitcoin is real currency, USD fraudulent, you see.

Mish is implying that  portfolio cash saving should be switched from the USD into bitcoin as a safer haven?

Just who is being foolish here?

FXStreet
Bitcoin vs Dollars: Which One is a Fraud? Which One is a Ponzi Scheme?
Mike “Mish” Shedlock | Sitka Pacific Capital Management,Llc

Joseph Salerno — A Program to Stabilize the Economy—in Four Words

Paul Cantor, Clifton Waller Barrett Professor of English at the University of Virginia and Associated Scholar of the Mises Institute, attended Ludwig von Mises’s seminar at NYU as a young man. He recently surprised and delighted a few of us by revealing that the line that he remembers Mises speaking most frequently in the seminar was “No farzer credit expansion!” As a native German speaker with an accent and less than complete familiarity with English usage, what Mises meant to say, of course, was “No further credit expansion!” Upon hearing this, it struck me that Mises pithily summed up in four words a program for “stabilizing” the economy, that is, abolishing booms, bubbles, and recessions. Why the entire program could—and should—be printed on a T-shirt.

Never heard of sectoral balances, I guess.

Mises Institute — Mises Wire

A Program to Stabilize the Economy—in Four Words

Joseph Salerno | academic vice president of the Mises Institute, professor of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics.

Edward Harrison — Where Post-Keynesians and Austrians meet on economics

Credit.

Credit Writedowns
Where Post-Keynesians and Austrians meet on economics
Edward Harrison

See also

Can Macron reform Europe?: A mental model for thinking about the economics

Yves Smith — Michael Hudson: William Goetzmann’s Money Changes Everything – A Travesty of Financial History Which Bank Lobbyists Will Applaud

Yves here. I received a review copy of Goeetzmann”s book, and I recoiled when I read the blurb. It was such an obvious example of orthodox propaganda that it went straight into the rubbish bin.

But sadly, the book is being touted by the usual suspects, such as the Financial Times, the Wall Street Journal, and the New York Times, as authoritative on the origins of money when it is unadulterated Austrian twattle. So Hudson is to be commended for doing the unpleasant but important task of slogging through the nonsense and debunking it. Please read his post and circulate it widely.…

More elite propaganda. Many if not most of them likely believe their own BS.

Naked Capitalism
Michael Hudson: William Goetzmann’s Money Changes Everything – A Travesty of Financial History Which Bank Lobbyists Will Applaud
Yves Smith

Nima Mahdjour — Modern Monetary Theory

Steve Keen ·
Chief economist at IDEAeconomics 

Excellent explanation. I hope this gets widely read in the Austrian community. I'm happily promoting it to Post Keynesian and MMT economists, because it is such a clear statement of the structure and logic of the actual monetary system. Scott Fulwiler first alerted me this this post, and he was also most impressed.

Being Libertarian
Modern Monetary Theory
Nima Mahdjour

Peter Cooper — Internet Marxists Who Are More Austrian than Neoclassical

In the previous post, we encountered the views of a small subset of Internet Marxists who appear to adhere to a rather hard-line, Chicago-like neoclassical understanding of the capacities of the state. There is another small subset, the Austrian Metalist Internet Marxists (or Austrian Marxists, for short), who appear to believe that a state currency not “backed” by gold must surely have zero value or, at the very least, command a level of acceptance likely to crumble at any moment. In reality, the choice between a gold standard and fiat money changes little of significance when it comes to the value of the currency or its acceptance, although it does of course affect the policy space a state leaves open to itself for as long as the currency arrangement remains in place.…

heteconomist
Internet Marxists Who Are More Austrian than Neoclassical
Peter Cooper

Jason Smith — Does market monetarism exist in reaction to fiscal stimulus?

Wherein Jason Smith figures out what Scott Sumner is up to.

Information Transfer Economics
Does market monetarism exist in reaction to fiscal stimulus?
Jason Smith

Jeff Deist — Four Ways to Build a Free Society

If there is one principle, and only one principle, that libertarians ought to apply when considering strategy, it is this: radical decentralization of state power must be our relentless goal.…

…democracy as a concept must be attacked and ridiculed whenever possible. Private property forms the basis for a free society, while majority rule — i.e., the system that permits the theft of private property — forms the antithesis of a free society.

Worth a read.

Four Common Strategies

When libertarians talk about what must be done, the discussion tends to revolve around four common strategy options. None of them are mutually exclusive necessarily and there can be plenty of overlap between them.

1. The Political Option

The first, we’ll call the political option, or to borrow a tired phrase, “working within the system.”…

2. Strategic Withdrawal

A second approach libertarians often consider might be loosely termed strategic withdrawal. You may have heard of the “Benedict option” being discussed by Catholics unhappy with the direction of the Church and the broader culture.…

This approach involves separating, withdrawing, or segregating in some way from the larger society and political landscape..…

3. Hearts and Minds

A third tactic that libertarians often advocate we might call “winning hearts and minds.” This approach is multi-pronged, involving education, academia, traditional and social media, religion, books and articles, literature, and even pop culture. …

4. Resistance

Of course another strategy often discussed among libertarians involves simple resistance to the state, whether open or covert. This tactic contemplates actions like civil disobedience, tax protests, evading or ignoring regulations, and engaging in agorism and black markets.

It also contemplates the use of technological advances to advance freedom. “Third way” libertarian technologists promote this approach, citing advances like encryption, cybercurrencies, and platforms like Uber — all of which when first developed existed in a sort of grey area as regards their legality.…

Mises Dailies

Four Ways to Build a Free Society
Jeff Deist

How to Use Economics & Not Be Used By Economists (4/6) — Lynn Fries interviews Ha-Joon Chang

Video and transcript.

FRIES: I'd like to ask you to tell us what's wrong with the view that one approach, the Neoclassical approach, is the right way of doing economics. In other words, what contributions from other major schools of economics, like the Marxists, the Austrians, the developmentalists, the institutionalists, the Keynesians, the Schumpeterians, the behavioralist schools, for example, show how they've differentiated themselves from the Neoclassical approach?

Real New Network
How to Use Economics & Not Be Used By Economists (4/6)

Lynn Fries interviews Ha-Joon Chang

Bryan Caplan — The Evidence of Altruism

The logic of collective action versus the free rider problem. Take that, economic liberalism.

Each of these stories appeals to self-interest, but economists almost uniformly reject them as absurd. Why? Because they ignore another beloved economic insight: the logic of collective action. When actors have a small effect on big social outcomes, and their only incentive to act is the big outcome itself, selfishness urges them to stand down, twiddle their thumbs, free ride, and yawn "Let someone else do it."

Econolog
The Evidence of Altruism
Bryan Caplan | Professor of Economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute.

Bryan Caplan is a Libertarian (anarcho-capitalist). But see his Why I Am Not an Austrian Economist.

Apparently, some Libertarians (right libertarians) get it about the logic of collective action and the free rider problem that arises from economic liberalism based on self-interest (rational pursuit of maximum utility).

On the other hand, all left libertarians get this, as well as social democrats and heterodox economics of the left — which is why they are on the left. Caplan links to the Wikipedia article on the logic of collective action, which is chiefly about the book of that title by Mancur Olson. What it fails to mention is Nobel laureate in economics Elinor Ostrom's collective action and social development. See her paper, Collective Action and the Evolution of Social Norms.

Oh, and contrary to Libertarian assumptions to the contrary, some people are actually motivated by altruism. Moreover, this is the normal path of human development toward self-actualization and unfolding human potential.

Altruism one manifestation of spiritual maturity. Caplan seems to think that his explanation is comprehensive, whereas it is only partial. Just as humans develop physically, emotionally and intellectually, they are also capable of developing spiritually, that is, the the direction of greater universality as the boundary of individuality recedes toward the horizon of wholeness.

Spiritually immature people imagine that altruism means giving up individual desire, choice and action, which kill one's individuality, one's sense of personal self, that to which one relates everything, which is what one is. However, the opposite is the case. As one grows spiritually through actualizing one's potential as a human being, one becomes more fulfilled, more complete, and happier. As Aristotle observed in Book One of Nichomachean Ethics, happiness or well-being (eudaimonia) is the by-product of excellence (arete). This is consistent with the perennial teaching of those to whom humanity looks to as sages about the spiritual path and the progressive realization of inherent potential. To miss this is to miss what is truly important in life.

Lord Keynes — Huerta de Soto gets it Wrong on the Gold Standard

In short, the idea that under the gold standard the industrial nations “generated the greatest increase in prosperity in history” at any time before or since is untrue, and is nothing but a libertarian myth.

Social Democracy For The 21St Century: A Post Keynesian Perspective
Huerta de Soto gets it Wrong on the Gold Standard
Lord Keynes

Andrew Lainton — Capital – A Forgotten Theory in the 21st Century

Some of what you want to know about "capital" in the history of economics going back to Ricardo.

Decisions, Decisions, Decisions
Capital – A Forgotten Theory in the 21st Century
Andrew Lainton

Bryan Caplan — Why Do Government Enterprises Work So Well?

Even the best government enterprises are slow to cut costs. They're bad at innovation. And they're almost uniformly terrible at putting aside Social Desirability Bias to answer every enterprise's most fundamental question: Is this worth doing at all? Yet the anomaly remains: Simple economics implies that government enterprises should be far worse than they really are.

Unfortunately, I doubt the economics profession will ever take this anomaly seriously. Left-leaning economists don't want to grant the obvious case against government enterprise - and market-leaning economists would rather reiterate the obvious case against government enterprise than calmly test it against the facts.

EconLog
Why Do Government Enterprises Work So Well?

Bryan Caplan | Professor of Economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute

Schiff vs. Shedlock: The Great Austrian Macro-Tainer Smackdown

Noah Smith gets in on the act. :)

Noahpinion
Schiff vs. Shedlock: The Great Austrian Macro-Tainer Smackdown
Noah Smith | Assistant Professor of Finance, Stony Brook University

Lord Keynes — How Noah Smith Should Have Criticised Austrian Economics

Outline of a complete critique of Austrian Economics with references, pointing out the similarities and differences of the different strains of Austrian economics and Post Keynesianism.

Social Democracy For The 21St Century: A Post Keynesian Perspective
How Noah Smith Should Have Criticised Austrian Economics
Lord Keynes

Izabella Kaminska — What’s the problem with a scarcity of safe assets?

Non-essential, but sort of fun explaining the Zero Hedge head space.

Dizzynomics

What’s the problem with a scarcity of safe assets?

Izabella Kaminska

See also the followup, A no-debt society?

Robert P. Murphy — The Importance of Capital in Economic Theory

Robert Murphy looks at Thomas Piketty's use of the term "capital" through the lens of Austrian economics and finds it wanting in that it does not sufficiently distinguish financial capital from physical capital goods. Keynesians agree that capital is a heterogenous concept and treating it as a single aggregate as neoclassical economists do is an unwarranted assumption that leads to difficulties. Murphy also sets forth some of the Keynesian critique of the neoclassical view of capital and its consequences.

Conclusion
Although capital plays a central role in economic theory and in the world, many economists have historically given it insufficient attention. Even economist Piketty's bestselling book explicitly devoted to capital still relies on a very simplistic conception of capital as a single aggregate. A proper appreciation of the heterogeneous structure of capital shows the weakness in standard theoretical approaches, which employ "simplifications for analytical convenience" that actually obscure the economic reality. To cite just two benefits, the more nuanced appreciation of capital clarifies important questions of income distribution and also provides a much more compelling explanation of the possible limitations of monetary and fiscal policy in boosting employment during recessions.

Library of Economics and Liberty
The Importance of Capital in Economic Theory
Robert P. Murphy | economist with the Institute for Energy Research (IER) specializing in climate change, a senior fellow in business and economic studies at the Pacific Research Institute, a research fellow with the Independent Institute, and an associated scholar at the Ludwig von Mises Institute

Mises on the four classes of people and the basis of the market society

"Saving—capital accumulation—is the agency that has transformed step by step the awkward search for food on the part of savage cave dwellers into the modern ways of industry. The pacemakers of this evolution were the ideas that created the institutional framework within which capital accumulation was rendered safe by the principle of private ownership of the means of production. Every step forward on the way toward prosperity is the effect of saving. The most ingenious technological inventions would be practically useless if the capital goods required for their utilization had not been accumulated by saving.

"The entrepreneurs employ the capital goods made available by the savers for the most economical satisfaction of the most urgent among the not-yet-satisfied wants of the consumers. Together with the technologists, intent upon perfecting the methods of processing, they play, next to the savers themselves, an active part in the course of events that is called economic progress. The rest of mankind profit from the activities of these three classes of pioneers. But whatever their own doings may be, they are only beneficiaries of changes to the emergence of which they did not contribute anything.

"The characteristic feature of the market economy is the fact that it allots the greater part of the improvements brought about by the endeavors of the three progressive classes—those saving, those investing the capital goods, and those elaborating new methods for the employment of capital goods—to the nonprogressive majority of people. Capital accumulation exceeding the increase in population raises, on the one hand, the marginal productivity of labor and, on the other hand, cheapens the products. The market process provides the common man with the opportunity to enjoy the fruits of other peoples's achievements. It forces the three progressive classes to serve the nonprogressive majority in the best possible way.

"Everybody is free to join the ranks of the three progressive classes of a capitalist society. These classes are not closed castes. Membership in them is not a privilege conferred on the individual by a higher authority or inherited from one's ancestors. These classes are not clubs, and the "ins" have no power to keep out any newcomer. What is needed to become a capitalist, an entrepreneur, or a deviser of new technological methods is brains and will power. The heir of a wealthy man enjoys a certain advantage as he starts under more favorable conditions than others. But his task in the rivalry of the market is not easier, but sometimes even more wearisome and less remunerative than that of a newcomer. He has to reorganize his inheritance in order to adjust it to the changes in market conditions. Thus, for instance, the problems that the heir of a railroad "empire" had to face were, in the last decades, certainly knottier than those encountered by the man who started from scratch in trucking or in air transportation.

"The popular philosophy of the common man misrepresents all these facts in the most lamentable way. As John Doe sees it, all those new industries that are supplying him with amenities unknown to his father came into being by some mythical agency called progress. Capital accumulation, entrepreneurship and technological ingenuity did not contribute anything to the spontaneous generation of prosperity. If any man has to be credited with what John Doe considers as the rise in the productivity of labor, then it is the man on the assembly line. Unfortunately, in this sinful world there is exploitation of man by man. Business skims the cream and leaves, as the Communist Manifesto points out, to the creator of all good things, to the manual worker, not more than "he requires for his maintenance and for the propagation of his race." Consequently, "the modern worker, instead of rising with the progress of industry, sinks deeper and deeper.... He becomes a pauper, and pauperism develops more rapidly than population and wealth." The authors of this description of capitalistic industry are praised at universities as the greatest philosophers and benefactors of mankind and their teachings are accepted with reverential awe by the millions whose homes, besides other gadgets, are equipped with radio and television sets."

Ludwig von Mises

The Anti-Capitalist Mentality

Grove City, PA: Libertarian Press, originally published 1956, p. 31-33

(h/t Sandwichman at EconoSpeak)