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.
Esuric, I think you are a regular dude that is going to avail themselves of the checking services of banks, particularly under the circumstance that you can rely upon deposit insurance and government backstoppery.
But this only relates to your position vis government regulated banking, and doesnt say much for fractional reserve banking outside of government control, which you have no personal experience in.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Deposit "insurance" doesn't protect the real value of your deposits; it only protects the total nominal value, which I don't care about. In other words, I prefer the services of a fractional reserve bank over a "storage warehouse" in almost all circumstances (unless the fractional reserve bank is engaging in overly risky behavior), even when there is no deposit insurance. Now I'm not saying that this is necessarily the case for everyone. Extremely risk-averse individuals may prefer the storage warehouse, or to keep their money under their mattress. But saying that FRB exists solely because of federal deposit insurance is an assertion with little-to-no evidence, empirical or otherwise.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
What are you telling me Esuric, that government intervention in the financial markets are so mild that banks and their customers face no moral hazard vis simple savings accounts? that we should look up on the current market for financial services as a good example of what banking would be like if there was no government?
Esuric:prefer the services of a fractional reserve bank over a "storage warehouse" in almost all circumstances
Let's just touch base here on what should be very trivial: When your bank creates more claims then actual physical gold, it is increasing the supply of claims/notes, not the supply of actual gold. Agree? (hopefully)
Now then, how in the world is the greater supply of bank notes being maintained at a fixed par with the gold? Now don't evade and tell me what I already know; that the notes are treated as money substitutes.
No. What I said was this: I would prefer the services of a frb over a "storage warehouse" even in the absence of deposit "insurance." I understand that such "insurance" doesn't really protect the real value of my money in the bank, but I also realize that this may not be the case for most individuals. Most people believe that their deposits are entirely protected by the FDIC, and as such don't discriminate between banks, which creates substantial moral hazard. Additionally, our current monetary system is characterized by a consolidation of all banks into essentially one bank, governed by a central bank which centrally plans the monetary system and destroys the natural market mechanisms that attempt to eradicate monetary disequilibrium (mechanisms which exist in a free banking environment).
My only point is that I see no reason whatsoever why Rothbardians are so sure that individuals, across the board, would prefer holding onto metallic base money (very inconvenient) over bank money, and pay storage fees rather than earning interest. Are people really this risk-averse? History suggests that they are not.
You make it seem as if only gold counts as "real money" and that all other forms of money are somehow "fake." Base money is merely one component of the entire supply of money, and the purchasing power of money is determined by the supply and demand for money in general (money in the broader sense).
As Professor Selgin already explained, individuals exchange control over base money for other forms of money (IOU's). The fact that you consider this form of money to be "illegitimate" is entirely immaterial. You are presupposing what you're trying to prove. But maybe I've misunderstood you.
Esuric:But maybe I've misunderstood you.
I don't know what you understood or not. I took gold as an example. You said you prefer a fractional reserve bank. That means there is some base money commodity, i.e., gold, silver, or whatever you want. I don't really care.
Nothing has to be "fake". If a bank issues bank notes and the public accepts them as money, then so be it. However, these banknotes will have some market exchange rate in terms of other monies, i.e, gold, other competing bank notes, etc.... These exchange rates will be determined by the supply of demand of each money on the market.
With fractional reserve banking, here also you have two physically different forms of money. Base money and bank notes. Yet, no matter how many multiple notes are issued on top of the base money, each note continues to be exchanged at a fixed par with the base money at the original face value of the first issued note. Until of course, confidence is lost in the bank and the notes become worthless.
DD5: Selgin:I admit that bank money is "property": the holder owns an IOU, just as someone who buys a bond owns...a bond! Yet this particular IOU matures instantly at face value the moment its holder shows up and demands it. It's rather fascinating that all it took was essentially two things to be redefined in order to overcome the praxeological impossibility of having two individuals being the exclusive owners of the same thing at the same time. 1. The claim ticket or warehouse receipt is redefined as an IOU 2. The depositor is redefined as creditor. Yet evertying else remains the same. We still have a fixed amount of pysical property and a greater amount of claims (call them IOUs) issued, each representing a claim to the full amount orignially deposited. Nothing has changed except terms are redefined by you, yet the process in principle remains the same.
Selgin:I admit that bank money is "property": the holder owns an IOU, just as someone who buys a bond owns...a bond!
Yet this particular IOU matures instantly at face value the moment its holder shows up and demands it. It's rather fascinating that all it took was essentially two things to be redefined in order to overcome the praxeological impossibility of having two individuals being the exclusive owners of the same thing at the same time.
1. The claim ticket or warehouse receipt is redefined as an IOU
2. The depositor is redefined as creditor.
Yet evertying else remains the same. We still have a fixed amount of pysical property and a greater amount of claims (call them IOUs) issued, each representing a claim to the full amount orignially deposited. Nothing has changed except terms are redefined by you, yet the process in principle remains the same.
Well, either we consider depositor to mean "a type of creditor" or to mean "a type of warehouse customer." It seems to me people are generally aware that a bank is not a warehouse and not a safety deposit box, so "a type of warehouse customer" is not a reasonable interpretation for the word depositor. "A type of creditor" may also not be a reasonable interpretation, but if not, what is your definition of depositor - how does it differ from warehouse customer?
Why anarchy fails
This reliance on praxeology that some here have is not only hindering good economics from being done, but it is also, from my understanding, totally at odds with what praxeology is for. I'm not seeing the 'ontological glue' that's holding together a particular definition of money with positive aspects of reality. In other words, I don't see how deriving things praxeologically makes a difference with how that thing actually functions in the real world. Just because 'it defies logic'--according to some--that you can't have two property titles to the same thing (i.e., money), it still hardly qualifies as an argument against FRB and the way the it would behave in an unhampered market.
Esuric: Could you give me an example of a good which is not economic? What’s the point of this question? I merely asked z if he believes in the demand for money.
Could you give me an example of a good which is not economic?
What’s the point of this question? I merely asked z if he believes in the demand for money.
The point is you used the term economic good, and I don't know what that is, so I am trying to imagine what an non-economic good is.
So, what is an example of a good which is not economic?
Esuric:It is simply an economic fact that money is demanded because of its ability to facilitate exchange. This shouldn’t be controversial at all. Chapter 8 in Mises’ Theory of Money and Credit provides a full explanation.
What is an economic fact? Again, I am trying to figure out what facts are different when they become economic. You see, I love facts, and I would like to know the factual basis for these claims, without assertions or appeals to authority. When I claim your statement isn't consistent with praxeology, a response as I have quoted above is basically non-responsive.
Othyem:This reliance on praxeology that some here have is not only hindering good economics from being done, but it is also, from my understanding, totally at odds with what praxeology is for.
Source please.
Othyem:In other words, I don't see how deriving things praxeologically makes a difference with how that thing actually functions in the real world.
Appeals to the real world are just empty assertions. If you have facts, share them.
Othyem:Just because 'it defies logic'--according to some--that you can't have two property titles to the same thing (i.e., money), it still hardly qualifies as an argument against FRB and the way the it would behave in an unhampered market.
What does that have to do with praxeology?
No one knows exactly what will happen in an unhampered market.
Othyem: This reliance on praxeology that some here have is not only hindering good economics from being done, but it is also, from my understanding, totally at odds with what praxeology is for. I'm not seeing the 'ontological glue' that's holding together a particular definition of money with positive aspects of reality. In other words, I don't see how deriving things praxeologically makes a difference with how that thing actually functions in the real world. Just because 'it defies logic'--according to some--that you can't have two property titles to the same thing (i.e., money), it still hardly qualifies as an argument against FRB and the way the it would behave in an unhampered market.
Yeah, this sort of claim ostensibly relies on logic/praxeology, but before that it really relies on definitions. The 100-percenters might take "deposit receipt" to be a type of "property title," where the very definition of property makes it nonsensical for more than one person to own it. These choices of definitions seem to be what the FRB side is taking exception to in these cases. It is a distraction to bring up praxeology when the definitions are really what is being contested. Note, though, that it is a distraction both sides have engaged in: the 100-percenters saying the FRBers are denying praxeology/logic, and the FRBers saying that complete adherence to praxeology is limiting, or whatever. The definitions are where the real action is, for now at least.
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.
"Now then, how in the world is the greater supply of bank notes being maintained at a fixed par with the gold? Now don't evade and tell me what I already know; that the notes are treated as money substitutes."
How? 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. Or are you one of those 'praxeologists" who think that facts are irrelevant to economics?
If I had a dime for every time a 100-percentist put forward a "theory" that was overwhelmingly contradicted by experience, I'd be a rich man!
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."
But it seems this has already been covered. I think some of the 100-percenters said that, sure, the contract may say that banknotes are IOUs, but most customers don't read the contract and don't know this, or are brainwashed into thinking otherwise by the establishment and media. To which some FRBers said that people do know that banknotes are, at least, not property titles, else there wouldn't be bank runs.
As I said in my first post in this thread, the debate keeps shifting: sometimes it's about what is (matters of fact), sometimes it's about what should be, sometimes it's about what would be, and as it rotates among these it always touches back on definitions. For what it's worth, the shifting seems to be more from the 100-percenter side. If I were playing for the FRB side, I wouldn't let them shift. I would nail them down to one specific question at a time, and one set of definitions, and refuse to budge. Like Kaz tried to do here.
In other words, I probably agree with your position, but I don't see how you'll ever prevail if you follow the other side into every little diversion they present for you. Almost everyone I've seen take on the 100-percenters comments that they are like a religion; if so, the tactics for dealing with dogma are warranted. That is, don't let them lead you around; focusing and boring straight through on one point is the only thing that works (if you are right). Any other approach can be evaded by continually changing what the argument is about, peppered with definitional legerdemain.
I know I am commenting from the sidelines on this one so it probably sounds kinda ridiculous (like, "Why don't you make these arguments, AJ, if you are so sure it'd work?"), but this sticks out to me so much that I just had to say something. The reason I am not really jumping into this, is I still have no idea just what the debate is about! I don't know what the tenets of the 100-percenter side nor the free banking side are - are they descriptive, moral, speculative, or a combination (or nothing; that is, just words)?