Hat tip: Mises Daily
by Kaj Grussner
Thursday, February 18, 2010 by Kaj Grussner
Austrians have long called for a reform of the monetary system. The current, Fed-driven, fiat-money system is on the verge of collapse. But however bad the current system is, a new system won’t necessarily be better.
Many libertarians would favor a return to the gold standard, while others would be content with simply repealing legal-tender laws and allowing competition in currencies. However, even in a great collapse like the one looming now, these reforms may still seem too extreme to the general public. This is especially true if they have an alternative that seems reasonable and gives total control over the monetary system to the state. One such alternative is the 100-percent-reserve solution advocated by Stephen Zarlenga, director of the American Monetary Institute, and author of the book “The Lost Science of Money.”
I caught an interview with Mr. Zarlenga on Gnostic Media, in which he discusses his book with host Jan Irwin. The first part of the interview was broadcast on August 30, the second part on December 20, 2009. Neither Zarlenga nor Irwin are economists, but both have strong opinions about economics and economists.
On several occasions, Zarlenga singles out the Austrian School and makes unfounded claims about Austrians, their methodology and their approach to monetary theory in general. In this article, I will attempt to correct Zarlenga on the issues he has with the Austrian School and his ideas on monetary theory in general.
The Definition of Money
Zarlenga claims that Austrians define money as gold, a definition that according to Zarlenga has its roots in the classical economics of Adam Smith. I’m not sure on what he founds this claim, but, obviously, it is not true.
by Jonathan M. Finegold Catalan
Hat tip: Mises Daily
“Liberty Leading the People” (1830)
Eugène Delacroix (1798–1863)
Entrepreneurship is a building block for economic development. Individuals who invest and invent are instilled with a passion to create wealth. The integral role played by entrepreneurship in economic and human development is almost universally accepted. The main point of contention is in pinpointing the source of the incentive to invest.
Is the drive to devote time and capital into an investment a natural phenomenon within the human race? Or does it need to be harnessed and inspired by some higher authority, such as government? If the latter is true, then without the state, humankind is forever condemned to stagnation.
Although these questions may seem bizarre, there are intellectuals who believe that passion and entrepreneurship rely on the guidance of the state. In an article titled “Bringing the World out of Denial: The Power of Passion, the Fallacy of Fear,” James Cusumano appeals to government as a means of avoiding the pitfalls of human fallibility. He even goes as far as to praise government-spending programs, such as NASA, as methods of adding wealth to economies. Without the state, he believes, human passion will never be provoked to bring about great advances in human society.
World-renowned Harvard biologist, E.O. Wilson thinks that human beings may be hardwired to avoid worrying about future generations. He points out that, “For hundreds of millennia, those who worked for the short-term gain within a small circle of relatives and friends lived longer and left more offspring — even when their collective striving caused their children and empires to crumble around them.”
by Jeffrey A. Tucker
Yesterday, I inadvertently squandered $4000 plus worth of medical resources during a lunch break. That I could do this, gain no benefit, and not even see the bills, is what’s right and wrong with American medical care.
I’ll tell the story in moment but first consider that none of the politically active reform proposals being debated deal with the absence of market pricing for medical care, that system-wide problem that there is a disconnect between the supplier and the consumer, and this problem is absolutely pervasive. You rarely know the prices of what you are getting, and even when you do, the prices are an abstraction: something to know but not act on, since they don’t really affect your premiums as with other forms of insurance.
The result is hardly surprising. End-user costs soar higher and higher and resource use lacks that essential component of economizing by priority. The American system just assumes that there is no such thing as too much technology, too many drugs, too much service, too much care. The consumer, in the end, isn’t really a consumer but a passive conduit of an unchecked contractual relationship between producer and third-party payers who are heavily subsidized by taxpayers.
hat tip: Mises Daily
by Friedrich A. Hayek
[A lecture delivered at the Gold and Monetary Conference, New Orleans, November 10, 1977. It made its first appearance in print in the Journal of Libertarian Studies, Volume 3, Number 1.]
When a little over two years ago, at the second Lausanne Conference of this group, I threw out, almost as a sort of bitter joke, that there was no hope of ever again having decent money, unless we took from government the monopoly of issuing money and handed it over to private industry, I took it only half seriously. But the suggestion proved extraordinarily fertile. Following it up I discovered that I had opened a possibility which in two thousand years no single economist had ever studied. There were quite a number of people who have since taken it up and we have devoted a great deal of study and analysis to this possibility.
As a result I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject. It is a business which competing enterprise can maintain only if it gives the public as good a money as anybody else.