Monetary Theory

Any student of money and banking recognizes the sophistry in saying that "the Fed does not pay with paper money."

There was no "irrational exuberance"; the exuberance was completely rational given the price signals at the time.

No, the bill can't be paid and won't be paid. That much should be obvious. But denying the obvious is a mental trait built into the structure of the system. The economic crisis of 2008 was really just the realization that the consumer-debt load at the time was unsustainable.

If Congress passed legislation that systematically reduced the debt ceiling over time, the economy could be rebuilt on a solid foundation. Entrepreneurs in the productive sectors would realize that an ever-increasing proportion of resources (land, labor, and capital) would be at their disposal.

Ron Paul recently made (another) splash among economic pundits with his suggestion that the Treasury simply cancel the $1.6 trillion in its debt.

It's going to happen unless we get radical reform soon.

The money inevitably flows to the latest speculative fashion, whatever it happens to be.

When property rights in money are poorly defined, negative external effects develop. The institutional setup of the euro, with its poorly defined property rights, has brought it close to collapse and can be called a tragedy of the commons.

Without government, unemployment could be relatively easily alleviated.