Well, the money cranks have weighed in on my last article on the gold standard. The response, which didn’t actually link to my piece as is customary in such debates (does my interlocutor not wish that his readers might read the original lest they spot the egregious errors in his own post?), is what you would expect it to be. It’s lengthy, self-indulgent and highly moralistic… in other words: its Austrian economics at its finest!
Funnily enough the author engages in what can only said to be an act of disavowal. The author, for example, insists that he is not engaged in moralistic cant when he writes (I quote using .jpeg because I don’t seem able to copy and paste from the text of this website),
So, the author is making the case that he is not engaged in moralism or baking normative judgements in supposedly positive statements. In my last post I referred to the Bank of England’s analysis of the money creation process. Well, the author of the post ‘engages’ with this analysis in manner that… well… I’ll let the reader judge for themselves whether the following is the cool and balanced positive analysis that is characteristic of good monetary economics or is instead a deeply moral and normative series of statements about an institution that the author finds aesthetically objectionable.
Yes, that’s right… central bank operations are equivalent to fraud. By whose legal standards? By the author’s own, of course. What the author has done is constructed his own little legal system in his head. He then goes around judging various institutions by his own legal standards. He is powerless legally, of course, but that’s not the point.
This is a bit like when Austrian nuts tell you that taxation is theft. And when you ask them why, if taxation is theft, taxmen aren’t regularly defending themselves in the dock they start to grumble nonsensically about some fantasy legal system they have invented in their own minds. It’s all normative, moralistic rubbish of course, but that’s the nature of the game.
A good deal of the rest of the post is all nonsensical ruminations on the nature of ‘value’ and speculation on a wholly invented history (anthropologists call fictional historical accounts like this ‘myths’). It’s all just a big story peppered with half-baked metaphysics and sprinkled with implicit normative judgements. It is on these metaphysical foundations — highly speculative, mythic, story-telling basically — that the author builds his little castles in the sky by which he castigates the evils of contemporary institutions. It is only people of a certain type of emotional disposition that will buy into these arguments, of course, and so there is very little point debating on their terms.
The author also claims that Keynesian theory is “very sketchy” on the question of hoarding. We can only assume then that the author has never formally studied economics because, as every undergraduate knows, Keynes’ theory of liquidity preference is basically a theory of hoarding. Here is Keynes in the original,
The concept of Hoarding may be regarded as a first approximation to the concept of Liquidity-preference. Indeed if we were to substitute “propensity to hoard” for “hoarding”, it would come to substantially the same thing. (General Theory, Chapter 13)
He also says that Keynes thinks that “stable discount rates meant stable prices”. This is complete garbage, of course, as anyone who has read How to Pay For the War can attest to (good summary here and here). Keynes viewed inflation as having largely to do with distributional factors — especially surrounding nominal wage increases. But this is a less egregious mistake than claiming that Keynes’ views on hoarding are sketchy as proper Keynesian inflation theory is no longer taught in classrooms.
The author also says that I “take the side of the Bullionists” against the Banking School in the last post. In this regard, I simply don’t think that the author read my post at all closely and I shall not pursue this line of argument — if he reads the last post again he will note that I never mentioned the Banking School because their views were irrelevant to the specific point that I was dealing with. My rule is generally: if you can’t understand what I’m saying even after I have clearly written it down then I am not interested in your “rebuttal”. Anyway, I get the impression that the author of the post prefers monologue to dialogue so I see little point in trying to communicate myself any more clearly than I already have.
I do not, however, want to come across as the author of the post; that is, in lecturing my interlocutor on my views. That is altogether tedious and I have no interest in doing so.
Finally, the author circles back to my saying that monetary systems are a creature of convention. He then says that no, in fact they are a creature of force because they are put in place by the State. This, again, simply reflects the author’s own moral or metaphysical views about whether there should or should not be a state issuing fiat money. What I call ‘convention’ because I am relatively content with contemporary forms of social organisation, the author calls ‘force’ because he is not. Who is ‘correct’ in this regard? Well, that is subjective. So, there’s no real point of debating it.
Summing up, there is nothing of substance in the response. All the arguments are ultimately traceable back to whether you agree with what I refer to as the conventions of the contemporary monetary system (or ‘force’ if you insist on a more evocative nomenclature). If you accept these conventions you can move on and do some actual economic analysis. If you do not you can engage in social protest and construct ever more hackneyed and irrelevant mythic and metaphysical justifications for your subjective views.
There is no debate to be had here. It all depends on your emotional temperament. If you are by nature a practical person you will accept the current system for what it is and then pursue your goals within it. If you are by nature a person who prefers, as I called it in the last post, “self-enforced social isolation” then you will join the New Austrians and create your myths and your metaphysics that justify the particular lifestyle that you have chosen. It is up to you, dear reader, how you wish to proceed. But if you decide on the latter course of action I suggest you remove my blog from your bookmarks… because you won’t find much of interest on here.