Hal Varian doesn't tell us why the dollar bill in our pocket has value, writes Frank Shostak. To say that the value of money is due to social convention is to say very little. What Varian has told us is that money has value because it is accepted, and why it is accepted? Because it is accepted! Obviously this is not a good explanation of why money has value.
Instead of the archetypal Austrian Business Cycle, writes Sean Corrigan, we currently have the bizarre modern phenomenon of the further discoordination caused by the wild orgy of debt-financed consumption. It has been officially promoted to keep aggregate spending and arbitrary price levels unconscionably high throughout the recession. To expect it to work is analogous to expecting that wrapping a corpse in an electric blanket to delay rigor mortis and bring about a resurrection.
There are many available definitions of the money stock: M1, M2, M3, MZM, and a host of others. Frank Shostak says that it actually does matter which one we use.
Before the Fed blessed this country with unlimited liquidity, American history saw two previous attempts at creating a centralized institution of money and credit: the First and Second Banks of the United States. Both generated financial havoc, and were rightly opposed by the champions of freedom and sound money. Historian Scott Trask explains.
The current international monetary system is based on floating fiat currencies and is constantly subject to unsustainable distortions. This much has been known to Austrians for some time, and Robert Blumen provides the background from Bretton Woods to the current day. Awareness of the problem is now starting to spread to mainstream economists, as suggested by Richard Duncan's new book. He tells the story of how the dollar unsupported by gold has gotten led the world into a terrible mess.
In a wide-ranging interview Sudha Shenoy comments on her decision to become an economist, the influence of Rothbard and Kirzner, the politics of Hayek, current trends in global trade, US protectionism, the bad turn in economic theorizing, and the need to resolve the conflict between Islam and the West.
The American people have not seen widespread bank runs since 1933. In that object at least, the Federal Deposit Insurance Corporation has succeeded. But Scott Trask asks: at what cost? To insure deposits is to invite bad banking—and worse; it is to foster reckless speculation and unsound investments, help make inflation permanent instead of intermittent, obstruct the curative powers of economic contractions, and divorce freedom from responsibility.
Gold is the best money, because for centuries, as a result of countless individual choices, it has evolved as such. It was not imposed on the market by force, but was cultivated in the soil of the market itself. Christopher Mayer explains.
It was Mises, before Hardin, who identified the problem of overutilization wrought by public property. The problem is not limited to land ownership, however. In banking, writes Philipp Bagus, common deposit ownership leads to credit expansion and finally the drive to centralized control of money and banking in the form of a central bank.
