Memo to David Frum: More Money Not Necessary for Economic Growth

In discussion of gold as a monetary institution I often hear that the supply cannot expand fast enough to accomodate economic growth. But why should this be true? (For a related discussion, see Bob Murphy’s response to David Frum’s articles on the gold standard.). The idea that economic growth requires more money is based on a confusion of the real and the nominal. In fact, economic growth does not depend on the quantity of money at all. Any rate of economic growth can occur with any quantity of money.

Don’t Blame Subprime Lenders!

Why would a businessperson choose to lend and borrow in an artificial boom once they’ve seen several business cycles? Because, even though business investors know that the bust will come, it makes no sense to refuse funds while other businesses are using the new funds to compete. And why doesn’t the population at large just refuse to participate? Because Congress has established high transaction costs (capital gains taxes) and legal tender laws that prevent common citizens from the use of alternative assets to replace government money. As a result, expanding businesses get to use cheap socialized financing. That financing gains its value from diluting existing money. But the real negatives occur not in the booms and busts, but their additive result over time.

Did Capitalism Cause the Great Depression?

Murray Rothbard, in a memo dated 1959, reviews Robbins’s book on the Great Depression. Lionel Robbins’s The Great Depression (Macmillan, 1934) is one of the great economic works of our time. Its greatness lies not so much in originality of economic thought, as in the application of the best economic thought to the explanation of the cataclysmic phenomena of the Great Depression. This is unquestionably the best work published on the Great Depression. At the time that Robbins wrote this work, he was perhaps the second most eminent follower of Ludwig von Mises (Hayek being the first). To his work, Robbins brought a clarity and polish of style that I believe to be unequalled among any economists, past or present. Robbins is the premier economic stylist.

The Tax that’s Anything but Fair

Tired of reading yours truly on evils of the FairTax? Here is Bruce Bartlett’s newest analysis of the tax that’s anything but fair: “Why the FairTax Won’t Work.” Mr. Bartlett has written a very exhaustive and very thorough critique of the FairTax. Since presidential wannabe Mike Huckabee backs the FairTax, this issue is very relevant. Don’t be fooled because FairTaxers and Ron Paul each want to abolish the income tax.

Whoo hoo for Radiohead

Victory for the idea that free downloads and purchased hard copy can be complements and not always substitutes. NYT : “In a twist for the music industry’s digital revolution, “In Rainbows,” the new Radiohead album that attracted wide attention when it was made available three months ago as a digital download for whatever price fans chose to pay, ranked as the top-selling album in the country this week after the CD version hit record shops and other retailers.”

Recession or Depression?

Many people are finally saying the R word: Recession. The fundamentals don’t look good. The externals are even scarier: dollar and stocks skidding, gold and other prices (particularly producer prices) rising. But what has tipped the psychological scales is the statistic no one has cared much about in many years: unemployment. FULL ARTICLE

Last Knight Live Blog 19 Kraus

Chapter 12, Fresh Start, opens the Part IV of the book titled Mises in His Prime which deals with the period that was both academically productive and rewarding in a number of different respects. Chronologically, the period roughly spans the time after the WWI until Mises moved to Geneva and started lecturing there at the Institute of International Studies in 1934.

Recession or Depression?

Many people are finally saying the R word: Recession. The fundamentals don’t look good. The externals are even scarier: dollar and stocks skidding, gold and other prices (particularly producer prices) rising. But what has tipped the psychological scales is the statistic no one has cared much about in many years: unemployment.
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