He's a great speaker, similar to Tom Woods. I did have three red flags go up, however, during his speech.
1). He continues to say that Spain is better off with the Euro than the Peseta.
2). He claims that if the increase in money is above and beyond the increase in gold, a bubble will result. But what about Tulipmania, where there was simply a huge increase in gold?
3). He said that Glass-Steagal was a small move in the right direction, although it did not take care of the problem. That one really bothered me.
Other than that, a fantastic lecture.
Every decent man is ashamed of the government he lives under - Mencken
what about Tulipmania, where there was simply a huge increase in gold?
http://wiki.mises.org/wiki/Tulipmania
Other than that, cool story. WIsh I could have seen it.
Link to lecture?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
Was it yesterday's lecture, by any chance? Held by the Instituto Juan de Mariana? I actually gave a lecture after Huerta de Soto (<-- just a plug).
The Euro: The basic point that Huerta de Soto makes, I think, is correct. The real argument is not really in favor of the Euro (because, Huerta de Soto prefers the classical gold standard, or better yet privately chosen money), but in favor of fixed exchange rates. He sees fixed exchange rates as a restraint on government spending in the sense that it: (a) avoids the monetary nationalism of floating exchange rates and, as a corollary, (b) makes it impossible for government to devalue to pay for spending. One other interesting point he makes is that, unlike the gold exchange standard during the 1930s, the euro very difficult to leave, because it would cause market chaos in that it would take some time for a new form of money to emerge. In a nutshell: the euro is an imperfect substitute for the classical gold standard, ironically designed by politicians who did not intend to develop some a constraining monetary order. A much more developed argument can be read here: In Defense of the Euro.
Gold: Also, the great European price revolution of the 16th and 17th centuries is a great example of the effects of the introduction of high volumes of bullion and its expenditure.
Was the event recorded on video?
Huerta de Soto's was for sure. I'm not sure when it'll be uploaded (probably soon). It was actually a really short speech. Most of his time was dedicated to explaining a new video he and, I think, the Instituto put out on the financial crisis. Today he's giving another presentation at the 'Liberal Book Fair,' I think on any new edition of Money, Bank Credit, and Economic Cycles and a new economics textbook for undergrads.
Did I seriously not link to the lecture?! It was late when I posted it; I'll blame it on that.
Here it is.
1. Of course it is. Germany pays their bills if they have a Euro.
And even if at some point Germany insists on not paying anymore, they are better off with the Euro, because the money the citizenry gets paid with is actually worth something. If they go back to the peseta, they will get paid in currency that will not allow them to import anything, because why would the French or anybody want those stupid pesetas? Spain doesn't produce anything worth buying [the reason they are in trouble in the first place].
Bottom line, a vampire [Spain] always is better off when he is attached to his host [Germany].
2. My guess is that he means under normal circs, although every increase in the money supply will set off a business cycle, whether it come from more gold or more paper, when the increase is in gold it's pretty small. Mining the stuff etc is not that easy [which is why it is rare and thus used as money in the first place]. Tulipmania was an exceptional case, where the influx of gold into the Dutch banks was huge.
3. Glass Steagal had two parts. First, the govt insured all deposits, meaning that the banks could now gamble recklessly and the taxpayer would foot the bill. Then there was a second part [which wikipedia says is usually called the G. S. Act] which limited the kinds of banks that were allowed to engage in the wilder forms of reckless gambling.
Now given the first part of the act, the second part was a small move in the right direction, reducing the damage of the first part a little bit. But it did not go far enough, which would have been abolishing the FDIC altogether [=repealing the first half of G.S.].
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It's easy to refute an argument if you first misrepresent it. William Keizer
Jonathan,
That link you provided is awesome. I see it is today's Mises daily as well.
What I got out of his delicious article: The Euro, which was created fro only one reason, to allow endless money printing by France and other spendthrift countries [as Bagus made clear in his book], has become the agent forcing them to be more responsible.
It's true as far as it goes. But my question is, what is to stop them from printing endless quantities of Euros [their very goal in the first place] and giving them to the PIIGs? De Soto is only talking about the story thus far, where for some reason they have been reluctant to print so much.
BTW congrats on being a speaker at that prestigious event. Hope you were well received.
de Soto's essay that is only now making it to the Mises Daily was actually published at Cobden almost a month ago now.
Bob Wenzel at EconomicPolicyJournal offers his take:
The more centralized any sector of an economy gets, the more difficult it is to keep stability in such a sector, even the money sector. Political pressures will simply pull the sector in different directions leading to all sorts of distortions that would never occur in a free market. It appears we are about to witness this in the EZ. If the entire experiment doesn't fall apart, massive money printing appears the next step now that power appears to have moved to the southern EZ countries. This is as far from the gold standard as you can get.
This nails it, in my opinion.
But, a gold standard doesn't guarantee a free market. Huerta de Soto's point is that a fixed exchange standard is better than a floating exchange standard, not that the Euro is perfect or is a physical manifestation of a truly free market.
Love the diversity of opinion in Austrian circles. As for the Glass Steagal comment, I've also read Shostak say similar things in Mises Dailies, not because he supports market regulation as a principle, but because it is a practical to limit credit expansion in our cartelized monetary system.
Please note, I could be completely off, but that's what I'm recalling. I'll try to find the article from Shostak.
"Does It Make Sense to Resurrect the Glass-Steagall Act?"
Mentioned here:
Financial regulation as cause of the financial crisis - Argument from effect