We have our own "great divorce" to worry about these days. Of course, the problem of jettisoning the idea of good and evil is still with us, as can be seen in the rejection of the natural moral law that underpins all sound religions and philosophical systems. That may be (and we believe it is) at the root of many of the problems that afflict modern society. Regarding the financial system and the institutions of money and credit, however, we see this "great divorce" manifesting itself in the separation of money and credit from production.
The divorce of money and credit from production, in turn, results in a rejection of Say's Law of Markets, which holds that "production = income." If someone has the means with which to produce — whether labor or capital — then "money" is no problem. This is because in Say's Law, "money" is derived from production, being nothing more than a symbol of something of real value that has been produced, or the present value of something that will be produced. "Money," while it is not in and of itself of value, thereby functions to facilitate exchanges between individuals.
Consequently, "money" is not itself "effective demand" or "purchasing power," as Keynes and many other monetary theorists appear to believe. Money has purchasing power because it represents marketable goods and services, and stands in for the reality of production behind the symbol of money. What money is, is anything that can be used in such an exchange, standing in for the good or service of real value. This gives us the legal definition of money: anything that can be used in settlement of a debt.
Now you know All About Money. Be that as it may, the main events of the week are:
Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we'll see that it gets into the next "issue." If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog - do not send them to us to post for you. All comments are moderated anyway, so we'll see it before it goes up.
• There was another series of important meetings this week regarding the project in East St. Louis. A great many issues were settled and (of course) many more were raised. Matters appear to be reaching the point where an action plan can be determined.
• We received the second volume of John Maynard Keynes' Treatise on Money (1930). The Treatise on Money was Keynes' first attempt to systematize his thought. After a few years of reflection (and a complete trashing of the book by von Hayek), Keynes started from scratch with his General Theory of Employment, Interest, and Money (1936).
• Work on the draft of our book on ideas of money, credit, and banking through the ages has been progressing well. We finished up through the first third of the 20th century, and are currently in the middle of the Keynesian revolution, as is probably evident from the fact that we have been gathering additional, if somewhat obscure, Keynesian material.
• We are almost ready to begin with the work of Dr. Harold G. Moulton, president and co-founder of the Brookings Institution, whose 1935 monograph, The Formation of Capital, presents a solid proof of the real bills doctrine and a refutation of Keynesian economics. We also obtained a number of other books by Moulton, including the three other books in the series of which The Formation of Capital is the third volume: America's Capacity to Produce (1934), America's Capacity to Consume (1934), and Income and Economic Progress (1935).
• As of this morning, we have had visitors from 33 different countries and 43 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the UK, Brunei, Canada and Venezuela. People in Israel, Indonesia, Venezuela, Argentina, and Brazil spent the most average time on the blog. The most popular posting by far continues to be "What Caused the Economic Crisis," followed by the Keynesian paradox of thrift (which seems to be especially popular in Brunei for some reason), and the letter to the Wall Street Journal on Caritas in Veritate, the news reports, the response to Dr. Michael Novak (which continues to be ignored), and "What You Can Do to Address the Economic Crisis. With respect to the amount of time spent reading, the postings on the usury series, the "Reign of the British Currency School, and the Cobbett series appear to be the most popular.