To put it bluntly, what are the major differences between the two and whats the deal between the feuding?
I'll admit, as far as I know I have not read any explicit "Masonomics" books, but my understanding of the difference is that George Mason tends to stress Hayek more along with more "mainstream" (hopefully I'm not angering anyone with that) monetary theories and methdological approaches. They also seem to cite Mises as supporting their views (FRB etc) while downplaying Rothbard. Mises Institute is more Rothbard (who they say is more in tune with Mises) and the "traditional" Austrian approach. Am I missing any other significant distinguishes?
So whats the drama between them all? Judging by various posts on the internet they appear to have different academic ideas and some of their arguments can get a little personal at times.
Finally, what happened to Gene Callahan? I remember reading his book along time ago and loved it, and now I hear he isn't an Austrian anymore (although he frequents over at Coordination Problem and generally bashes Rothbard). Then I read on a post here he got mad over his book deal with the MI, but I don't know if this is trash talking or not.
And for a bonus question, if you had to pick a "side", which do you prefer? Honest.
For me, Mises Institute.
"But saying that FRB exists solely because of federal deposit insurance"
I'm loving what I learn over here at MI particularly about economics. As someone with zero training in economics but a lot of informal reading on it (and I think a bit of innate intelligence, e.g. I'm a PhD in Applied Mathematics), I have nothing to contribute to this kind of detailed debate except A) an audience and B) the occasional question.
On the latter, I have one general question and one specific to the quote above:
1) What is the imagined/predicted role of *private* deposit insurance in a fully free society? I've read this whole thread without seeing any mention of it: is that because there is an argument that it won't emerge in a free-banking/frb setting? [I have the online version of Selgin's free-banking document queued up for reading, so perhaps this question is answered there.] I have just kind of naively assumed that banks with lower reserve ratios might try to make themselves more attractive to potential depositors by arranging private deposit insurance (or perhaps that individual depositors would do the same).
2) Are most participants in these kinds of detailed debates formally trained economists, or I suppose, what percentage are vs simply being well-informed "amateurs"? I mean no disrespect or judgment on the latter: I'm well aware that having a degree in something imparts no special ability to know more about it (I am routinely wrong on mathematical issues, for instance, despite my degree). I'm really just curious.
I've read most of the thread, and I didn't see that argument being brought up. So far, the focus is on providing proof for the claim that FRB can only exist with a government that has a monopoly on money, or provides the insurance. I find your point a good enough refutation of that notion. Why can't there be a bank-deposit insurer in a free banking system?
I know Selgin is more on the fromally trained end of the spectrum. I can assure you that many here (myself included) have little formal training in economics and are amateurs/hobbyists. Nevertheless, I've seen some members here have some great debates and discussions with econ PhDs. If austrian econ is a hobby, it's going to take up 5-20 hours a week of your life, on average. ;)
Selgin: For goodness' sake: bank deposit agreements specify in elaborate detail just what the making of a "deposit" entails. Similarly, conventional banknotes made it perfectly clear that the notes were IOUs ("We promise to pay the bearer..." etc.) The often-repeated claim that deposit "receipts" and banknotes have taken the form of property titles--that is, titles to basic money rather than IOUs specifying repayment in such, is demonstrably false. This is a matter of fact, not definitions. The 100-percenters are the ones who are confusion matters, by pretending that are argyument about what the term used to refer to X "ought to mean" is the same as an argument about what X itself "ought to be." Do this, if you doubt what I'm saying: search the string "bank deposit bailee debtor" in google books. You will find a long list of legal works addressing the matter in question. Perhaps the authors were all part, along with bankers themselves, of the grand conspiracy that the 100-percenters must implicitly imagine to have been aimed at keeping the vast majority of people in the dark. But if so, how odd that they would be writing books to clarify the secrets they were supposed to be safeguarding! And of course, the 100-percenters themselves also "know" the truth behind the conspiracy. Like all conspiracy theorists, they start out from the premise that something is known only to a bunch of evil people, who supposedly are capable of keeping it under wraps indefinitely, and to their own brilliant but outnumbered and besieged selves. To which the only appropriate response is: Bullshit. It belongs together with stories about faked moon landings, not with anything deserving to be called economics.
For goodness' sake: bank deposit agreements specify in elaborate detail just what the making of a "deposit" entails. Similarly, conventional banknotes made it perfectly clear that the notes were IOUs ("We promise to pay the bearer..." etc.) The often-repeated claim that deposit "receipts" and banknotes have taken the form of property titles--that is, titles to basic money rather than IOUs specifying repayment in such, is demonstrably false. This is a matter of fact, not definitions. The 100-percenters are the ones who are confusion matters, by pretending that are argyument about what the term used to refer to X "ought to mean" is the same as an argument about what X itself "ought to be."
Do this, if you doubt what I'm saying: search the string "bank deposit bailee debtor" in google books. You will find a long list of legal works addressing the matter in question. Perhaps the authors were all part, along with bankers themselves, of the grand conspiracy that the 100-percenters must implicitly imagine to have been aimed at keeping the vast majority of people in the dark. But if so, how odd that they would be writing books to clarify the secrets they were supposed to be safeguarding!
And of course, the 100-percenters themselves also "know" the truth behind the conspiracy. Like all conspiracy theorists, they start out from the premise that something is known only to a bunch of evil people, who supposedly are capable of keeping it under wraps indefinitely, and to their own brilliant but outnumbered and besieged selves.
To which the only appropriate response is: Bullshit. It belongs together with stories about faked moon landings, not with anything deserving to be called economics.
Protip: It'll be difficult for you to convince people of your argument when you're hostile to them right off the bat. You'll put someone on defense mode when you end your argument by calling your opponents cult members.
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."
Daniel Muffinburg: Selgin: For goodness' sake: bank deposit agreements specify in elaborate detail just what the making of a "deposit" entails. Similarly, conventional banknotes made it perfectly clear that the notes were IOUs ("We promise to pay the bearer..." etc.) The often-repeated claim that deposit "receipts" and banknotes have taken the form of property titles--that is, titles to basic money rather than IOUs specifying repayment in such, is demonstrably false. This is a matter of fact, not definitions. The 100-percenters are the ones who are confusion matters, by pretending that are argyument about what the term used to refer to X "ought to mean" is the same as an argument about what X itself "ought to be." Do this, if you doubt what I'm saying: search the string "bank deposit bailee debtor" in google books. You will find a long list of legal works addressing the matter in question. Perhaps the authors were all part, along with bankers themselves, of the grand conspiracy that the 100-percenters must implicitly imagine to have been aimed at keeping the vast majority of people in the dark. But if so, how odd that they would be writing books to clarify the secrets they were supposed to be safeguarding! And of course, the 100-percenters themselves also "know" the truth behind the conspiracy. Like all conspiracy theorists, they start out from the premise that something is known only to a bunch of evil people, who supposedly are capable of keeping it under wraps indefinitely, and to their own brilliant but outnumbered and besieged selves. To which the only appropriate response is: Bullshit. It belongs together with stories about faked moon landings, not with anything deserving to be called economics. Protip: It'll be difficult for you to convince people of your argument when you're hostile to them right off the bat. You'll put someone on defense mode when you end your argument by calling your opponents cult members.
Not only that, but peer understanding in itself is an incorrect argument. For instance, let us consider it in another context:
Only 1% of all published physics papers work in Twistor theory framework; "fact."
"Oh, Twistor theory is wrong! Only 1% of researchers understand it, after all"
Or is it because Twistor theory uses angular momentum as starting point, instead of coordinates? For this reason, it requires mathematics to map spacial phenomenna into this framework, which is intuitive and elegant, but inaccesable to vast majority of physicists and medicore mathematicians who lack relatively high level of training or comfort working with homology, which in fact is only one of very many subjects mathematicians can devote their time to.
It may be proven correct. It may be proven incorrect; but not by referring to number of people who study it as opposed to other alternatives.
I agree with professor Selgin that discounting of banknotes will occur. It is required of us, however, then, to discuss what algorithm will be used, because otherwise we can assert nothing about market interest rate, dependent upon loanable funds, being unbiased indicator for people's saving preferences and thus quantity of capital actually available to be hired.
It seems to me that debate should be about risk assignment (that part of it which is not merely entrepreneurial decision-making).
Same with competing currencies; people will be less willing to use money that is depreciating, and will switch to other currencies. But in what proportion? Because certainly, they will use some logic to arrive at that proportion. So it is important and interesting to discuss that logic insofar as we may.
"Right off the bat"? Daniel, I've been dealing with the same argument referred to hear for years now. The "hostility" comes after hearing the thing repeatedly asserted despite many attempts by myself and others to explain why there's no basis for it.
In fact, my participation on this forum, addressing these claims yet again, marks me as the least hostile, most patient, and most indulgent of the wellknown critics of the 100-percentists. The others have long since given up on this group!
George, I assure you that your side is likely unaware of, and has had little if any interaction with this particular group.
selgin's right. there was no element of propaganda in the nasa programme, nor was there ever any strategic value in sexing up nasa's abilities. besides, the state could never distort the truth of something shown on tv - live!
http://www.aulis.com/jackstudies_index1.html
Selgin: "Right off the bat"? Daniel, I've been dealing with the same argument referred to hear for years now. The "hostility" comes after hearing the thing repeatedly asserted despite many attempts by myself and others to explain why there's no basis for it. In fact, my participation on this forum, addressing these claims yet again, marks me as the least hostile, most patient, and most indulgent of the wellknown critics of the 100-percentists. The others have long since given up on this group!
I'm referring to this thread only.
EDIT: What Rothbardians have you engaged on this forum for years? After all, your generalization includes those here at this forum.
Liberty Student,
No source in particular, except the large body of work by Mises, Rothbard, et al. on praxeology. This thread has gone in a couple of directions and I don't want to pull it somewhere else by bringing in a debate about praxeology. My post was in regards to DD5's comment about the "praxeological impossibility" of holding two property titles to the same thing, which he and others think nullifies the theory of free banking, as if the functioning of the market hinged on how theorists are defining their terms. I think this is a very weak attempt at winning the debate through semantic fiat. Even if it were "theft" for a bank to extend credit beyond its amount in reserves, this fails to explain how "theft", as such, creates negative consequences for FRB, that is, how theft in this case makes FRB unviable. To me it's an unsophisticated argument which amounts to "FRB is theft, therefore it can't work." Insofar that there are good arguments against FRB, they are good because they focus on its alleged inefficiency/subobtimality--not because it's defined as theft, and therefore unworkable. It's akin to saying government intervention is inefficient because it's coercive and coercion is wrong. Well...that's only partly true. There's some missing logic there.
Also, 100 percent reservists have a rather imperialistic view of property in that they wish to define what property is for everyone else, including all of posterity. But in a free market it's not unrealistic to think that people will have different ideas about what property actually entails. Like I said earlier, 100 percent reservists just better get used to the idea of free banking, because it ain't ever going away--even in a free market (especially in a free market). In fact, it's pretty much utopian in my view. In order for banks to adhere to the 100 percent standard, practically everyone in society (or everyone that mattered) would have to want it.
Othyem, the problem is pp. 61-62, of professor Selgin's Theory of Free Banking.
i. Mises took the 100% reserves position, because he uses Bohm-Bawerk's capital theory. Selgin does not link money theory to capital theory, which allows him to avoid what he believes to be "mistaken view" of Mises.
However, this cannot be done, and Mises is not mistaken. Separation of meeting demand for loanable funds independent of operation and success of whole economic system cannot be considered.
So long as market interest rate, determined by quantity of loanable funds and demand for loanable funds, is used as representitive to quantity of capital at immediate future, which is something no-one can directly observe, since each person has his own individual time-preference, expressed in their respective saving and spending habits.
ii. Express this problem in another way, minus ecomic jargon, as one mathematician I respect greatly did.
Every ADAPTIVE SYSTEM has:
(1) variable quantity Z which is citerion of fitness (e.g., profitability);
(2) variable quantity X determining fitness of system at time T, which is not directly observable, as function of system's behavior B; if it was, then there would be no problem and no reason for adaptation, would there?;
(3) vector Y, which is directly observable, which is linked in predictable way to X;
(4) system itself, which is function of Y;
(5) system's behavior B;
(6) variable quantity, decreasing as absolute deviation of X from Z is increasing, which determines probability that this whole system continues to function in next time period.
Every adaptive system's survival hinges, thus, upon step number (3).
Edit: As I mentioned in earlier post, an alternative to 100% reserve is one currency per bank, exclusive to each particular bank, which cannot be eliminated by competition. All credit expansion causes change in value and acceptability of that currency, discounting it to such extent that it would be if banks had 100% reserves of one common currency. Exactly same as adding a point (7), variable quantity C mapping to Y, such that system is now function of C, not of Y directly.
Selgin:By free convertibility. Or do you know an instance under competitive conditions in which banknotes routinely fell to a discount relative to the gold into which their issuers promised to convert them? You seem to think this must have beed the "logical" outcome of fractional reserves. But the facts go quite the other way.
So according to you, the observed facts disprove any praxeological and logical attempt to give a different interpretation to your observations. You are putting the cart before the horse. It is these observed facts that you have set out to prove in the first place. This is begging the question. It's a logical fallacy.
Selgin:Or are you one of those 'praxeologists" who think that facts are irrelevant to economics?
I presume we are talking about "facts" as in empirical observations. Such facts are important but not in the way you're using them. I don't need to be a praxeologist to understand that such facts can never substitute, and certainly not refute the logical, and in our case, the praxeological foundations of a theory.
Perhaps I am misunderstanding you. To the problem of a greater supply of notes then actual physical gold (or whatever), trading at fixed par with gold at the original value of the first note... Do you have a better economic explanation then the "But the facts go quite the other way."?