asked Tony Durden at Zero Hedge the other day. His answer: the Treasury Borrowing Advisory Committee to the US Treasury chaired by Matt Zames of J.P. Morgan. Durden discovered the following passage by Friedrich Hayek quoted in the TBAC’s quarterly refunding presentation made at the beginning of May. Here it is as found on p. 86 of the appendix of the slide show presentation:
“There can be no doubt that besides the regular types of the circulating
medium, such as coin, notes and bank deposits, which are generally
recognised to be money or currency, and the quantity of which is
regulated by some central authority or can at least be imagined to be so
regulated, there exist still other forms of media of exchange which
occasionally or permanently do the service of money.
Now while for certain practical purposes we are accustomed to
distinguish these forms of media of exchange from money proper as
being mere substitutes for money, it is clear that, other things equal, any
increase or decrease of these money substitutes will have exactly the
same effects as an increase or decrease of the quantity of money proper,
and should therefore, for the purposes of theoretical analysis, be counted
as money.”
Friedrich Hayek, Prices and Production 1931 – 1935.37
Durden concluded with the following ruminations:
That’s right: it would appear that the long hand of Austrian economics has penetrated deep into the narrative offered by the JPM and Goldman-chaired TBAC.
But… if that is the case, and if indeed the Treasury’s advisors are fundamentally at heart, Austrian, then that would diametrically change the entire ballgame. Simply because it would mean that whoever wrote the TBAC’s most recent slideshow understand perfectly well that the path the US has set off on is not only not going to have a happy ending . . . but will, naturally, end in tears.
So, one wonders: is that precisely what JPM and Goldman (the two heads of the TBAC) have had in mind all along?
And if so, one also wonders just how they really feel about gold…
