It would seem that using the printing press on currency always leads to trouble ( inflation, assault on savings ect ) , can you ever justify printing money?
Dustin S. Jussila: It would seem that using the printing press on currency always leads to trouble ( inflation, assault on savings ect ) , can you ever justify printing money?
No.
Abstract liberty, like other mere abstractions, is not to be found.
- Edmund Burke
Spideynw: If you want to live in a society with booms and busts, then by all means, FRB is great. But I am sure you will deny reality. If you haven't noticed, the U.S. job market has not grown at all in the last ten years, as of today. I do not believe the stock market has grown for the last ten years either, as of today. But you go on and keep on spouting unjustifiable claims.
If you want to live in a society with booms and busts, then by all means, FRB is great. But I am sure you will deny reality. If you haven't noticed, the U.S. job market has not grown at all in the last ten years, as of today. I do not believe the stock market has grown for the last ten years either, as of today. But you go on and keep on spouting unjustifiable claims.
First, fractional reserve banking is not what causes business cycles. Disequilibrium is what causes business cycles - though I would rather live in today's world than in 17th century colonial America.
Second, I'd attribute the slowing of private job growth to non-monetary reasons; I don't know how you can claim investment hasn't grown though.
existence is elsewhere
Juan:I should have elaborated. It is necessary to keep a modern growing economy modern and growing. If you want to live in an agricultural society where people rarely go more than 10 miles in a week, then I suppose full reserves could work. Shouldn't people who post in this forum have at least a PASSING familiarity with economics ? I know anybody can use a computer to post stuff in a forum, but enough is enough...
I should have elaborated. It is necessary to keep a modern growing economy modern and growing. If you want to live in an agricultural society where people rarely go more than 10 miles in a week, then I suppose full reserves could work.
Shouldn't people who post a reply in a forum at least have a PASSING explanation for their responses? I know anybody can use a computer to post stuff, but enough is enough...
Wilmot of Rochester: First, fractional reserve banking is not what causes business cycles. Disequilibrium is what causes business cycles - though I would rather live in today's world than in 17th century colonial America. Second, I'd attribute the slowing of private job growth to non-monetary reasons; I don't know how you can claim investment hasn't grown though.
Feel free to read some of the free online books available at mises.org and come back when you have an understanding of economics.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
Spideynw: Feel free to read some of the free online books available at mises.org and come back when you have an understanding of economics.
Actually, I think it would be a good idea for some of the people on this board to "re-"read those books - minus the Rothbard ones. To see exactly what the Mises-Hayek theory is and how it relates to banking.
I.E. Not defining inflation as any increase in the supply of money when Mises defined it as an increase in the supply of money past the demand for money.
Take Rothbard out of the equation and "Austrian" economics suddenly looks a whole hell of a lot more like the type of economics George Selgin, Roger Garrison, Lawrence White, and Peter Boettke are doing.
Wilmot of Rochester:Shouldn't people who post a reply in a forum at least have a PASSING explanation for their responses?
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
Juan: In reality, no FRB means sound money and sound credit - key requirements for any working market. And in the absence of FRB there would be no booms and busts - instead there would be a more orderly and sustained growth. If you want to know why that is so, you need to study the basics of money and credit. Repeating wrong macroeconomic jargon about "demand for money" and "equilibrium" won't cut it.
Not according to Hayek or Mises!
Ludvig von Mises:It is a mistake to associate with the notion of free banking the image of a state of affairs under which everybody is free to issue banknotes and to cheat the public ad libitum. People often refer to the dictum of an anonymous american quoted by Tooke: "Free trade in banking is free trade in swindling." However, freedom in the issuance of banknotes would have narrowed down the use of banknotes considerably if it had not entirely suppressed it. It was this idea which Cernuschi advanced in the hearings of the French Banking Inquiry of October 24, 1865: "I believe that what is called freedom of banking would result in a total suppression of banknotes in France. I want to give everybody the right to issue banknotes so that nobody should take any banknotes any longer."
Ludvig von Mises:A lot of nonsense has been written about a perverse predilection of the public for banknotes issued by dubious banks. The truth is that, except for small groups of businessmen who were able to distinguish between good and bad banks, banknotes were always looked upon with distrust. It was the special charters which the governments granted to privileged banks that slowly made these suspicions disappear. The often advanced argument that small banknotes come into the hands of poor and ignorant people who cannot distinguish between good and bad notes cannot be taken seriously. The poorer the recipient of a banknote is and the less familiar he is with bank affairs, the more quickly will he spend the note and the more quickly [p. 439] will it return, by way of retail and wholesale trade, to the issuing bank or to people conversant with banking conditions.
Juan: Ludvig von Mises:A lot of nonsense has been written about a perverse predilection of the public for banknotes issued by dubious banks. The truth is that, except for small groups of businessmen who were able to distinguish between good and bad banks, banknotes were always looked upon with distrust. It was the special charters which the governments granted to privileged banks that slowly made these suspicions disappear. The often advanced argument that small banknotes come into the hands of poor and ignorant people who cannot distinguish between good and bad notes cannot be taken seriously. The poorer the recipient of a banknote is and the less familiar he is with bank affairs, the more quickly will he spend the note and the more quickly [p. 439] will it return, by way of retail and wholesale trade, to the issuing bank or to people conversant with banking conditions.
So when Mises argued against laws banning fractional reserve banking on the basis that it could lead to demand shocks for money, he did so because he thought that banks weren't ever going to have to increase the supply of money outside of a 100% backing?I get that Mises thought given the advantages of full reserves and fractional reserves he thought the full reserves had better alternatives, but it seems he wanted the best of both worlds and if he were shown the modern data and was familiar with other historical examples, I think he would probably conclude that prudent banking in a fractional reserve system is a fine idea.
Wilmot of Rochester:First, fractional reserve banking is not what causes business cycles. Disequilibrium is what causes business cycles - though I would rather live in today's world than in 17th century colonial America.
You're not an Austrian, you don't know what you're talking about, and you're wasting your own time.
"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."
Wilmot of Rochester:Actually, I think it would be a good idea for some of the people on this board to "re-"read those books - minus the Rothbard ones. To see exactly what the Mises-Hayek theory is and how it relates to banking.
How many times do I have to quote from Theory of Money and Credit, and Prices and Production directly before you close your mouth? Maybe I should copy and paste both books entirely?
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“It was the aim of the Currency School to prevent the periodical recurrence of general economic crises by setting a maximum limit to the issue of uncovered bank notes (all notes 100% backed by gold). An obvious further step is to close the gap that was not reckoned with in their theory and consequently not provided for in their policy by limiting the issue of fiduciary media in whatever form, not merely that of bank notes. If this were done (eliminating fiduciary media) it would mean it would no longer be possible for the credit-issuing banks to underbid the equilibrium rate (natural rate) of interest and introduce into circulation new quantities of fiduciary media with the immediate consequence of an artificial stimulus to business and the inevitable final consequence of the dreaded crises.” Pg 439, Theory of Money and Credit, Ludwig von Mises
"The doctrine of the elasticity of fiduciary media, or more correctly expressed, of their automatic adjustment at any given time to the demand for money in the broader sense, stands at the very center of modern discussions of banking theory. We have to show that this doctrine does not correspond to the facts, or at least not in the form in which it is generally expounded and understood." Pg 339, Theory of money and Credit, Ludwig von Mises
"If it were not for monetary disturbances, the rate of interest would be determined so as to equalize the demand for and supply of savings. This equilibrium rate, as I prefer to call it, he christens the natural rate of interest. In the money economy, the actual or money rate of interest ("Geldzins") may differ from the equilibrium or natural rate, because the demand for and the supply of capital do not meet in their natural form but in the form of money, the quantity of which available for capital purposes may be arbitrarily changed by the banks, causing disproportionalities." Pg 215, Lecture 1, Prices and production, F.A von Hayek
"Now, so long as the money rate of interest coincides with the equilibrium rate, the rate of interest remains "neutral" in its effects on the prices of goods, tending neither to raise nor to lower them. When the banks, however, lower the money rate of interest below the equilibrium rate, which they can do by lending more than has been entrusted by them, i.e., by adding to the circulation, this must tend to raise prices (either absolutely or relatively)." -Hayek
"Nevertheless, it is perfectly clear that, in order that the supply and demand for real capital should be equalized, the banks must not lend more or less than has been deposited with them as savings. And this means naturally that they must never allow the effective amount of money in circulation to change.... The banks can either keep the demand for real capital within the limits set by the supply of savings, or keep the price level steady; but they cannot preform both functions at once." Page 218, Lecture 1, Prices and production.
All of Mises' and Hayek's works completely refute you; not that it matters though, you're going to completely ignore this post like you always do.
The world moved on from Mises, Hayek and especially Rothbard.
scineram: The world moved on from Mises, Hayek and especially Rothbard.
*looks at the title banner at the top of the screen*
'Men do not change, they unmask themselves' - Germaine de Stael
Wilmot of Rochester: JackCuyler: In a free market, those banks would be subject to runs, with no central bank to bail them out. Then why haven't banks in the Bahamas gone under?
JackCuyler: In a free market, those banks would be subject to runs, with no central bank to bail them out.
In a free market, those banks would be subject to runs, with no central bank to bail them out.
Then why haven't banks in the Bahamas gone under?
Which part of "with no central bank to bail them out" was unclear? The Bahamas has had a central bank since the 70's.
http://www.centralbankbahamas.com/about.php
faber est suae quisque fortunae
scineram:The world moved on from Mises, Hayek and especially Rothbard.
Neo-Austrians?