Immediately after the presidential campaign of 1912, Woodrow Wilson began hedging on his promise to do something about the financial system. This, of course, was unacceptable to William Jennings Bryan, who had been made Secretary of State in return for his critical support in getting Wilson elected.
Tuesday, April 30, 2013
Monday, April 29, 2013
Why a Central Bank?, II: Where Did It Come From?
Why was the Federal Reserve System established? After Andrew Jackson shut down the Second Bank of the United States in the 1830s, the United States lacked a uniform and stable currency. Gold and silver coin did not circulate much outside cities in the East, and there wasn’t enough of it, anyway. Most people made do either with accounts with people and businesses with which they did business, or state bank and private bank banknotes, many of which fluctuated wildly in value, rarely passing at a full dollar-for-dollar.
Friday, April 26, 2013
News from the Network, Vol. 6, No. 17
One thing we’ve noticed from the responses to this blog and to CESJ books and lectures is that few people really understand two institutions basic to any society: private property and money. The problem is that modern economic theory has made these two things so complicated that their very simplicity comes across to some people as some odd, possibly even sinister.
Thursday, April 25, 2013
Why a Central Bank?, I: What Do Banks Do?
Tomorrow we join the Coalition for Capital Homesteading at their annual demonstration at the Federal Reserve Board of Governors building in Washington, DC. If you’re in the neighborhood, you might consider showing up to see the fun . . . and hear a few speeches, including a very brief one by me that might sound suspiciously like this posting (assuming I can condense it into five minutes or less).
Wednesday, April 24, 2013
Defining Money, VII: The Expanded Law of Reflux
The friend’s analysis raises a second problem. Compared to allowing the government to emit bills of credit at all, this is a relatively minor issue.
Tuesday, April 23, 2013
Defining Money, VI: The Real Bills Doctrine
Say’s Law of Markets, based on the fact that the purpose of production is consumption, is applied in the “real bills doctrine.” The real bills doctrine is simply this: that if the present value of private sector bills and notes used as the media of exchange in an economy is equal to the present value of all existing and future marketable goods and services in an economy (i.e., total savings, whether past or future), there will be neither inflation nor deflation, but an elastic, asset-backed money supply sufficient to meet the demands of agriculture, commerce and industry.
Monday, April 22, 2013
Defining Money, V: Say’s Law
Say’s Law of Markets is based on the obvious fact that because nothing can be consumed until and unless it is first produced, we must first produce before we can consume. If we wish to consume what others produce, we can only do so (absent gift or alms) by offering something we have produced for what others have produced.
Friday, April 19, 2013
News from the Network, Vol. 6, No. 16
It’s getting close to the annual Rally at the Fed, which will be taking place next week. In the interim, of course, life goes on (more or less), with slow but sure progress being made in a number of areas.
Thursday, April 18, 2013
Defining Money, IV: The Purpose of Production
Say’s Law of Markets assumes everything we wrote in the previous postings in this series — the “banking principle,” as a given. That is why the classical economists Adam Smith, Jean-Baptiste Say, Thomas Tooke, and others are called “banking school.”
Wednesday, April 17, 2013
Defining Money, III: A Bit About Bills and Banks
Yesterday we saw that all money is a contract, just as (in a sense) all contracts are money. All contracts consist of offer, acceptance, and consideration. Contracts that are used to create money (as opposed to changing the form of money, i.e., future v. past savings) are called bills of exchange.
Tuesday, April 16, 2013
Defining Money, II: The Medium of Exchange
Here is the beginning of the multi-part response to the question we were posed in yesterday’s posting. Even considering the length of the reply, we didn’t get around to answering. The e-mail arrived at the start of a holiday weekend, and for some reason known only to Baum’s demon of electricity, our internet access went out temporarily.
Monday, April 15, 2013
Defining Money, I: The Question
A week or two ago we got a question in the (e) mail. Because we spent an entire morning answering it, we thought we’d break it up and turn it into a series of blog postings. Since at that time we still hadn’t done our taxes, it seemed like a really good idea.
Friday, April 12, 2013
News from the Network, Vol. 6, No. 15
Most of this week has been concerned with preparations for next week’s trip to Cleveland and the annual Rally at the Federal Reserve on April 26, 2013. The weather has been warming up a trifle, as has the Rhetoric Against Everything. This, of course, is only to be expected as people become increasingly concerned about the deteriorating global situation.
Thursday, April 11, 2013
Own or Be Owned, VI: Principles of Economic Justice
The theory of binary economics as a system for optimal and sustainable production and consumption of marketable goods and services is underpinned by three interdependent principles of economic justice:
Wednesday, April 10, 2013
Own or Be Owned, V: Basic Binary
In the "post-scarcity" theory developed by Kelso, "Binary" means "consisting of two parts." Kelso divided the factors of production into two all-inclusive categories — the human ("labor"), and the non-human ("capital"). The central tenet of binary economics is that there are two components to productive output and to income: (1) that generated by human labor, and (2) that generated by capital. Classical economic theory, on the other hand, regards all output and income to be derived from labor whose productivity is enhanced by capital.
Tuesday, April 9, 2013
Own or Be Owned, IV: The Abundant Economy
Two assumptions that many people take for granted is that “economic scarcity” means that human wants and needs can never, ever be satisfied, and that the only way to finance new capital formation is to reduce wants and needs in order to have the wherewithal to do so.
Monday, April 8, 2013
Own or Be Owned, III: The Abolition of Private Property
Having established that Milton Friedman, poster child for reasoned and polite debate in economics, had no response to binary economics, we probably should look at what binary economics responds to: the idea that underpins both capitalism (greed) and socialism (envy). We refer, of course, to the slavery of past savings.
Friday, April 5, 2013
News from the Network, Vol. 6, No. 14
The stock market is “going crazy” again, down about 100 points the last time we looked. This is good news for the gamblers. Of course, going up 100 is also good for the gamblers. They make money either way.
Thursday, April 4, 2013
Own or Be Owned, II: Greed is Good?
As we saw in yesterday’s posting, the late, grate Milton Friedman was a past master at diverting attention away from questions he did not want to answer or, more likely, that he could not answer. Like many economists, he seemed to have an extreme animus toward anyone who raised an issue he was unprepared to deal with.
Wednesday, April 3, 2013
Own or Be Owned, I: Milton Friedman, Master of Debate
There is a Just Third Way. Not just any third way. The problem is that Gates or Buffett, other well-intentioned thinkers across the ideological spectrum, including the UK advocates of a “third way,” have never taken it seriously.
Tuesday, April 2, 2013
Don't Confuse Economists with the Facts!
Yesterday's Wall Street Journal carried a review of Federal Reserve Chairman Benjamin Bernanke's book, The Federal Reserve and the Financial Crisis. While we agree that the book probably doesn't address anything substantive, the review made a few errors itself. Naturally, we couldn't let that go by. . . .
Monday, April 1, 2013
April Fool! Neo-Distributism
Somehow it seems appropriate to post something about real distributism after going through a rather monumental slush pile of neo- this, that, and the other thing. After all, having been going through all the illogic that seems to characterize modern academia, politics, and Great Pumpkinists, a little common sense can be very refreshing.
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