The History, Present and Future of Central Banks, Feat. George Selgin
The History, Present and Future of Central Banks, Feat. George Selgin
The Director of the Cato Institute’s Center for Monetary and Financial Alternatives gives an eye-opening, 200-year history of today’s most powerful economic institution.
Our main conversation is with Dr. George Selgin.
In this eye-opening conversation, he and NLW go deep on the history, present and future of central banks, including:
Two Economists. Two Views on Bitcoin’s Ability to Disrupt Fiat Money
Two Economists. Two Views on Bitcoin’s Ability to Disrupt Fiat Money
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“Half of the audience here is like, ‘I hope you die in a fire.’”
As a libertarian, comedian and podcast host Dave Smith has a lot of common ground with bitcoin enthusiasts, who have a reputation for having a libertarian bent. But when he and others argue that bitcoin isn’t going to replace government-issued currencies, Smith argues…
È stata la FED a tenere bassi i tassi d’interesse?
È stata la FED a tenere bassi i tassi d’interesse?
di George Selgin
Quando mio fratello gemello ed io eravamo bimbetti, nostro padre ci convinse che avrebbe potuto far scattare il rosso e il verde sul semaforo in qualunque momento volesse. Alzando la mano verso la luce mentre eravamo ad un incrocio, diceva: “Ti comando di diventare verde… ora!” La luce cambiava proprio al momento giusto, mentre due ragazzini gridavano: “Papà, come fai!?”
George Selgin shows Adam Smith had a more accurate understanding of the history of money, barter, and credit than critics such as David Graeber assert.
This is a really excellent article by George Selgin over at Alt-M. In this article Selgin takes on the claims by David Graeber and co. that anthropological evidence overturns the ideas of Smith and Menger on the origin of money and somehow invalidates standard economics.
There is no doubt that I very much like Stephen Haber and Charles Calomiris’ great book “Fragile by Design” on the constitutional origin of banking crisis (take a look at my earlier posts on the book here and here)
I do, however, not agree with everything in the book and now George Selgin has a reviewof “Fragile by Design” that addresses some of these issues. It is a great review. The read the…
An "idiot savant" is, according to my Webster's New Collegiate Dictionary, "a mentally defective person who exhibits exceptional skill or brilliance in some limited field." So what's the term for an otherwise intelligent person who exhibits exceptional idiocy in some limited field? Well, I don't know the correct general term, assuming one exists. But for the particular instance I have in mind, "Josh Barro" will do nicely.
In his column for today's Business Insider, Mr. Barro, finding himself miffed by the concurrent decision of Delta Airlines and Hyatt Hotels to reduce the award values of the frequent customer credits he'd been accumulating from them, elects to complain about it.
But it appears that Barro had misgivings about employing the Business Insider's scarce column inches (and, presumably, getting paid for doing so) for what was, after all, mere personal kvetching of the sort best reserved for the poor sap on the next bar stool, and then only after at least one drink too many. So Barro decided that he'd better justify putting his little tirade into print by drawing from it a far-reaching economic lesson concerning...you guessed it: free banking!
Here, in full, is the lesson:
Libertarians often advocate for a system of "free banking" where monetary authority is shifted to private actors, who would theoretically be policed by consumers who demand stable currency values and protection from inflation. But as we can see, America already has a system of private monetary authorities, and they're an inflationary mess.
Airlines and hotel firms lock in loyal customers, only to pull the rug out from under them once they've run up significant asset balances. They cannot resist the urge to print. Can you imagine the disaster if we extended this system to ordinary currency.
Well, there you have it. No need to actually look into the long history of highly-reputable private currency suppliers in Scotland or Canada or the U.S. Suffolk System or a dozen other places. And so what if banks today have for some reason still not figured out that they might treat their customers' deposit credits like so many reward points, to be devalued at whim. ("So, Mr. Barro: you'd like to buy $100 Federal Reserve award dollars? No problem. That will be cost you $200 in deposit credits. What's that? Oh, I'm terribly sorry: didn't you receive our notice regarding the change in our award terms?) And never mind, finally, the actual record of the dollar's "devaluation," in terms either of goods generally or of gold--a record showing that only the Fed, among all past or present U.S. paper currency issuers, has ever managed to permanently devalue its paper with impunity.
Why bother, in short, referring to any facts at all, when all you need is a little analogy, served-up with a great dollop of unmerited self-assurance.
David, for the record, I don't "describe myself as an Austrian," and haven't done so since graduate school. Indeed, I consider myself no less a fan of your dad's [Milton Friedman's] work than I am of work by Hayek and Mises. I think a good economists [sic] cannot concern himself or herself with belonging to any school, or being loyal to one. I'm pretty sure your dad would have said the same. It was others who labelled him a "Chicago" economist, while the only label he sought was "good" economist.
Rothbard, on the other hand, was only too determined to identify himself with the Austrian School and, more than that, to both take part in a personality cult, built around von Mises, and attract such a cult himself. One sign of the presence of such a cult is precisely the scorn its members heap on potential rivals to the cult figure.
As a monetary economist (I don't pretend to judge Rothbard's other economic contributions) Rothbard was mediocre to bad. His version of the Austrian business cycle theory was naive--in essence it equated behavior of M consistent with keeping interest rates at their "natural" levels with the elimination of fractional-reserve banking, an equation that holds only with the help of about a dozen auxilliary assumptions, all of which are patently false. He then went on to conjure up an equally false history of banking and of bank contracts designed to square his theory of the cycle, with its implied condemnation of fractional reserve banking, with his libertarian ethics.
Thanks to all this nonsense people like myself and Larry White (who does still call himself an Austrian) have to waste oodles of time debunking his ideas--we most certainly haven't simply "ignored" them--that we'd rather spend attacking central bankers' shenanigans.
George Selgin in the comments section of David Friedman's blog
"Why was the Fed created?" with George Selgin — Ron Paul Lecture Series
I recommend pretty much any of George Selgin's talks, but I recommend this one in particular because it dispels the myth that unregulated banking before the Fed caused the currency panics. The account he presents is a monetarist one—in which depressions are caused by monetary contractions—and where interventions into the money market made the money supply unresponsive ("inelastic") to changes in demand for money.
