Yet More ‘Free Market’ Double Standards

It has gotten to the point where I think ‘free market’ proponents will advocate anything, so long as you frame it to be opposed to the state/Keynes/Marx.

1. Credit expansion causes boom bust cycles, but we shouldn’t use capital controls to prevent this (because liberty).

2. The fact that regulators can be captured means we shouldn’t use them. Similar arguments don’t apply with police and corruption, however.

3. The government should regulate and prevent fraud, but not information asymmetry, which is self-correcting. This is despite the fact that they are the same thing.

4. Historical context matters for gold as a medium of exchange. The historical context of capitalism, however, can be swept under the rug.

5. In a free society, we earn our income. Inheritance? Erm…

6. The best thing for wages and working conditions is full employment, and we can achieve this by getting rid of the minimum wage and regulations. This will increase wages and improve working conditions, but these higher wages and conditions won’t reduce employment in the same way as the regulations did before because free market.

7. There’s no such thing as a free lunch, but perpetual economic growth is a costless path to prosperity.

8. Inflation is caused by too much money chasing too few goods. This doesn’t apply with tax cuts for the rich and positional luxury goods.

9. We must evaluate theories based only on whether they corroborate with empirical evidence. However, I will ignore it when my theories do not.

10. The state is useless at doing anything. We don’t, however, question its ability to define property and enforce contracts effectively.

11. You favour domestic redistribution! You nationalist, look at all the starving people in Africa! What? No, we shouldn’t redistribute to them either.

12. I’m opposed to Keynes. Except I advocate expansionary fiscal and monetary policy, the same as him.

13. The arguments I use in favour of private property do not apply to intellectual property (as well as the inverse).

14. It  matters when the public sector crowds out valuable resources, but not when unproductive parts of the private sector do the same.

15. I’m an anarchist. Except I want corporations to rule the world.

16. Deficit spending on tax cuts for the rich is fine, but not on schools and other bad stuff.

17. I will argue against anti-trust and redistribution, despite advocating them elsewhere.

18. There’s no such thing as a free lunch, but competition always improves market outcomes.

19. Everything is subjective and individualistic. But it doesn’t matter how free people feel, we will use my definition of freedom and impose it on them.

20. Choice, choice, choice. But if a monopoly or cartel arises in the free market, it’s fine.

21. Being made to pay taxes just because you live in a certain territory is unjust. Paying rent is fine, though.

22. We claim the name of Adam Smith, yet neglect to criticise the division of labour, reject worker regulations, banking regulations, active monetary policy and misuse the term ‘the invisible hand‘.

23. We claim the name of Mises, but our views also conflict directly with many of the things he said.

24. I am Mises, and my views also conflict directly with many of the things I’ve said.

Bonus: Many libertarians are also Christians. It is difficult to reconcile these two belief systems.

Happy hunting!



  1. #1 by nfreiling on January 18, 2012 - 12:30 am

    We published a response that I hope you can read:

  2. #2 by powerofsymbols on January 19, 2012 - 12:34 am

    1. Artificial credit expansion that doesn’t happen on a free market causes the boom-bust cycle…

    It’s a bit like saying that cell mitosis causes cancer, so let’s artificially regulate cell mitosis with regular doses of ionising radiation to prevent it. After all, regular cells are much hardier and more resilient than cancer stem-cells right?

    (Oh wait, they actually do that…)

    2. Similar arguments do apply to all government.

    3. The government shouldn’t do anything. What’s “information assymetry”? Someone knowing something that someone else doesn’t? Are we not allowed to keep anything to ourselves?

    I presume it must be referring to insider trading regulations. Insider trading is not fraudulent. Fraud is when you deliberately induce someone to act based upon disinformation you provide them. If you sell stock, you’re releasing the information you’re witholding by doing so, really. It’s actually the fastest way of spreading such information. Everyone knows the score if a CEO suddenly dumps stock in their own company. If that’s prohibited by his contract with his company, which it most likely is, then he’s violated that contract.

    4. There has never been a free market. All the “historical” bashing of capitalism is really about fascism and corporatism.

    Besides, there are sound economic arguments for a hard currency which have no concern for whether or not it has been done before, and those are the really convincing ones.

    5. Strawman… There’s no such thing as meritocracy, because there isn’t an objective standard for what is more or less meritorious activity.

    Besides, a foolhardy heir will quickly squander an inherited fortunate, and any capital he owns will land up in the hands of people who “deserve” it, i.e who will employ it gainfully.

    6. Ok… This is like saying that you’ll get the same results if you try to force a completely out of shape piece of flab, like me, to run fives miles right now versus someone who is very fit choosing to run until he decides to stop. I’ll have died of a heart attack after one, whereas he might still be going after twenty or forty…

    7. What? No, perpetual economic growth takes a lot of work.

    8. Inflation is an absolute increase in the money supply. Does the government burn the taxes it receives, or does it spend them? It sure as hell doesn’t invest them wisely.

    9. A priori is really the way to go. Positivist reasoning is liable to have you confused if you haven’t defined any of your variables, and don’t even know what you’re looking at. You’re liable to come up with theories which have no relationship to reality if you start with an entirely unsupported premise (we are looking at a free market system) and go from there without ever questioning it.

    10. Yes we bloody-well do.

    11. You will note in the first paragraph of the article referenced regarding how welfare is nationalistic, that the author rhetorically concedes the point that welfare is not harmful, to allow for his argument… That doesn’t mean he actually believes that welfare isn’t harmful.

    Those who believe it isn’t harmful can explain why it isn’t nationalistic.

    12. I don’t really agree with Hayek on these subjects, but in any case, the criticism isn’t fair…

    In the first instance, whether or not something is ‘politically acceptable’ cannot apply to a situation in which only voluntary transactions are acceptable. You shouldn’t have to give your wallet to a mugger – it certainly won’t make you richer – but if he’s got a gun to your head, it might be the only politically appropriate course of action…

    Don’t forget that the exceptional deflationary low of the Great Depression had been “induced” – that’s what Hayek calls it – by the previous inflationary boom of the 1920’s, fueled by credit made artificially easy… So he’s really saying that government should clean up the mess it made. I don’t agree with that, because I don’t think it can. Nevertheless, he’s not talking about government solving a free-market problem, but government solving a government problem.

    State intervention in 1930’s and 1940’s Germany worked out so well, didn’t it?

    As to the second instance, he clearly isn’t talking about actually expanding the money supply. He says that government should disperse savings it has been holding. “Legislation to help the poor” could be just about anything under the sun, but you can bet it doesn’t refer to the expansion of the money supply.

    13. That’s because intellectual property isn’t. I don’t present arguments in favour of IP.

    14. Unproductive parts of the private sector are responsible for their own losses. They pay to be unproductive. Government extracts wealth by force to be unproductive. Incentives…

    15. A lot of people this guy refers to in order to make contradictions seem apparent would not claim to be anarchists at all. By and large, there’s no hypocrisy… Things are just pulled together from people who genuinely disagree with each other.

    You’ll note that the word “corporation” does not appear in the referenced interview. Speaking of insurers, Lloyds of London – one of the world’s largest systems of insurance – is not structured as a corporation.

    Corporations are a form of charter granted from on-high, bestowing special privileges and immunities. They are not free market.

    In any case, the salient differences between a government and a dispute resolution organisation is that the latter has the incentives to treat its customers well, and doesn’t claim a monopoly on territory or subjects.

    16. Tax cuts aren’t spending.

    17. This is the only half-way valid point in the entire article, because Milton Friedman is a highly intelligent man who didn’t get everything right. It’s wrong to assume that he’s the messiah, last prophet, and grand poobah of the free market.

    18. I’m sorry… This is just a Homer Simpson-level non sequiter that I can’t even begin to understand. Maybe it’s like point 7… Competition involves a lot of work.

    The article referenced doesn’t seem to bare any relation to the point that is apparently being made… I quote.

    “In fact, I suspect that something like the News of the World scandal might have happened even if the paper were run as a socialist co-op. ”

    19. No we won’t. If you, or anyone else, wants to be a slave, that’s fine. Only semantic arguments concerning the definition of ‘slavery’ stand in your way.

    20. Rothbard says it’s fine because he doesn’t think it will happen. If there is a market dominator for a short time, e.g Microsoft, Google, it doesn’t matter because they only managed to market the idea recently, and will be supplanted in due course as better things come out. Rothbard goes into great detail there about why he doesn’t think a monopoly can entrench itself on a free market, ever.

    21. You choose to pay rent.

    Being forced to pay taxes is fine, but being forced to pay any thief who isn’t wearing the special government hat isn’t? Isn’t that a contradiction?

    Paying rent is wrong, but being paid for your work isn’t? What about that? You think you have an absolute right to your body just because you say it’s yours? Did you work to earn your body, or did you inherit it from your parents’ labours? Why shouldn’t it be nationalised for the common good when you’re born? You must be a greedy capitalist pig if you think no one else has a right to resources you did nothing to earn.

    22, 23, 24, 25 – I wonder if all leftists today agree with Marx’s theories about British colonialism in India, or Gandhi’s theories about black people, or Mao Tse Tsung’s theories about the value of an “intellectual’s” life, or even with each other when there’s more than three of them in a room together…

    Are we in the business of finding and following some sort of messiah/last prophect, or are we in the business of learning, and building upon past knowledge?

    The chief reason we need freedom is because we don’t all think the same thing, and none of us are right. Ad hominems make no point about ideas whatsoever.

    • #3 by Unlearningecon on January 19, 2012 - 12:20 pm

      1. Baseless assertion that evades my point completely. Please explain to me exactly why credit expansion only causes boom-bust cycles when its FRB and not capital inflows.

      2. If you are against police too, then you are not an example of one who contradicts themselves. But plenty do.

      3. If you have to ask what information asymmetry is then you really need to read ‘the market for lemons’ by George Akerlof. And if you don’t believe the government should regulate fraud at all then congrats, you haven’t contradicted yourself, though it is a ridiculous position to take.

      4. Yep, capitalism in the real world works like that, not like fantasy Rothbardian utopia.

      5. Not a straw man, as it contained a link to a ‘free marketeer’ explicitly stating that we earn our income. And your second sentence is another assertion – there are plenty of heirs who have simply lived off their parents and have too much money to squander it all.

      6. The problem with analogies is that they suck. My point is this: if improved working conditions and wages are such a barrier to full employment, then how can you claim that they will be improved at full employment without undermining it?

      7. Work, yes, but the idea that production and consumption can continue to increase without having an ‘opportunity cost’ in the same way that almost everything else does is foolhardy.

      8. ASSERTION! Stop making assertions. And you didn’t engage my point properly. Positional luxury goods. Think about it a bit (and read James Kroeger).

      9. Misses the point. Aimed at Milton Friedman.

      10. Really? Seems a lot of libertarians rattle off ‘the state should enforce property rights, force, fraud, theft blah blah blah’ without considerations for the efficacy of the state, but then question it when someone suggests a role they don’t approve of.

      11. Irrelevant, this isn’t about the efficacy of welfare. This is about knee-jerk reactions to redistribution that end in contradictions. If Bowman had just admitted he wanted lower taxes in the first place and disapproved of any redistribution his position would have been defensible. But he tried to paint his opponents as nationalists for not wanting to redistribute, rather than discussing the pros and cons of such a policy, then proceeded to argue against international redistribution elsewhere.

      12. Jesus christ at referencing 1930s and 1940s Germany/. Do you really think that’s a real argument?

      If you do your research, Hayek renounced liquidationalism generally, not just in specific circumstances. Despite this he is still painted as an opponent to Keynes. That’s all there is to it, and your special pleading doesn’t help his case.

      13. Intellectual property isn’t what? (Did you not finish that sentence by accident?)

      14. Yep, this is demonstrated by the financial industry which adds so much value to the economy and pays for its own losses.

      15. I’m sorry but from that series of interviews he clearly does want insurance companies to rule the world. He wants them to ‘kill people in a rights respecting manner’, but claims to be an anarchist. It’s just weird. The word ‘corporations’ is a red herring. Companies. Shareholders. Individuals with a lot of customers. Whichever.

      16. Nope, but that’s not the point. They cause deficits, which many on the right profess to hate in other circumstances due to ‘burdening future generations’, but are strangely silent about with tax cuts (particularly for the rich).

      17. The point isn’t about him being a Messiah, it’s that he contradicted himself because he was a contrarian.

      18. Why do you think a reference to socialism refutes me?

      Just because you struggle to link things doesn’t make them a non-sequitur. ‘TANSTAAFL’ oh wait competition always improves outcomes. It’s not about the amount of work required, it’s about presupposing the world as being in some sort of pareto efficient state in certain places then saying it isn’t in others.

      19. What?

      20. No, Rothbard argues that it *is* possible but doesn’t matter.

      21. Nope, you don’t, because you can’t choose not to exist on the earth. If that earth his owned by private landlords then you have to pay rent, enforced by force, same as taxes.

      22. My point is broader than that. These institutes take prestigious names (well, Mises isn’t exactly, but anyway…) then completely misrepresent their thinkers. I am absolutely certain that Adam Smith would be appalled at much of what the ASI come out with, and I’m also sure that Mises would regard Rothbard and his followers as far too extreme for him, despite the fact that most from LvMI seem to be Rothbardians. And the Mises quote highlights the problems praxeology experiences when it comes into contact with the real world.

      I’m not cobbling together things said by different people who disagree with each other – I explicitly made an effort to link to the same people or at least blogs/institutes in each point. Now the people between points might disagree with each other, but that doesn’t undermine the individual contradictions.

      • #4 by Unlearningecon on January 20, 2012 - 1:57 pm

        (Apologies if this response sounded a bit short, there’s no room for tone on the internet).

  3. #5 by Lord Keynes on January 19, 2012 - 5:50 am


    I have also posted this at your blog.

    “1. Credit expansion does, indeed, cause boom-bust cycles. Many Austrians agree that outlawing fractional reserve banking would eliminate the problem–it is fractional reserve that allows the expansion followed by contraction. Additionally, fractional reserve also constitutes contract fraud because it essentially creates two claims to one piece of property. Capital controls are not the solution; solvent banking is.”

    Fractional reserve (FR) credit expansion can be pro-cyclical. But it has enormous advantages as well as disadvantages. Effective financial regulation and central banks are precisely what make FR banking stable.

    Fractional reserve banking is not fraud, and this is one of the worst, most ignorant, cultish dogmas of the Austrian school.

    FR demand deposits/transaction accounts require the giving up the ownership of the money you deposit and giving the bank that ownership of the monet – this is in no sense 2 people owning the same property.

    Taxes are coerced. You cannot avoid being taxed as long as you are alive. …

    Children are coerced by parents. This does not mean parenthood is immoral.
    Libertarian natural rights ethical theories are unconvincing.

    (3) . Monopolies and cartels cannot arise on the free market.
    Only if you redefine monoply as a “complete supply of a product maintained or established by government” – a sleight of hand.

    Even Rothbard admitted that a free market can result in some companies gaining complete supply of certain commodities. Therefore the Rothbardian objection to monopoly reduces to a mere objetcion to government. That being so, private monopoly tyranny is fine in the libertarian world. Another double standard.

    (4) 14. The difference between the private sector and the public sector is that the private sector can employ economic calculation through profit-and-loss analysis to determine whether they have squandered resources. The public sector cannot–production choices are a shot in the dark.

    Something does not need to be profitable to be economically and socially useful – e.g., government law and order, enforcement of contract, etc.

    In the imaginary equilibrium states beloved by neoclassicals and by Austrians (e.g., Mises’s ERE), there would in fact be no profit – yet production of commodities would continue to satisfy material human wants perfectly well. Funny how you people never notice this, when you go complaining that only a profit system can deliver goods or economic “calculation”.

  4. #6 by Paul Lockett on January 20, 2012 - 12:46 pm

    “13. The arguments I use in favour of private property do not apply to intellectual property (as well as the inverse).”

    Nor is there any inherent reason why they should. I think the use of the propaganda term “intellectual property” misleads people into believing there is an inherent equivalence.

    Material goods are rivalrous. Ideas aren’t. Therefore, if your basis for supporting property rights is that they act as an orderly form of dispute resolution between people who simultaneously wish to use the same item, but cannot, you would naturally support property rights over the former, but not the latter.

    • #7 by Unlearningecon on January 20, 2012 - 1:36 pm

      I’m playing devil’s advocate here as I understand IP has massive issues.

      The way I see your point is that ideas are not exhaustible in the same way that other resources are. This may be true, but IP provides an incentive for people to publicise and develop ideas in the same way property provides incentives to trade/set up business in other areas. Whether or not IP increases or decrease the flow of ideas is an empirical question and I’d be interested to see if you have any evidence either way.

      • #8 by Paul Lockett on January 20, 2012 - 2:35 pm

        “The way I see your point is that ideas are not exhaustible in the same way that other resources are.”

        The key point was rivalry, rather than exhaustibility, but, as concepts, they are in the same rough area.

        “Whether or not IP increases or decrease the flow of ideas is an empirical question and I’d be interested to see if you have any evidence either way.”

        I don’t have any to hand, but even if I did, it would be broadly irrelevant to the issue at hand. Your were suggesting that failing to apply the same arguments to intellectual monopolies and property rights over tangible objects was a case of double standards. I was highlighting a reason for legitimately treating them differently and not being guilty of double standards.

        It appears that we approach the underlying issue from a different ethical basis – I from a property rights minimalist position, where property rights are only acknowledged where rivalry can arise and you from a property rights maximalist position, where property rights are granted in any area where a benefit can be argued. That is a more fundamental divergence, but I hope that we can both agree that there are sufficient differences between intellectual monopolies and tangible property rights that it is legitimate to treat them differently.

  5. #9 by JMRJ on January 20, 2012 - 6:04 pm


    “You cannot control the price unless you have a system that prevents concentration of control over money and credit. You cannot prevent concentration of control over money and credit unless you subject the banking system to sufficient supervision and oversight.”

    “Concentration of control over money and credit” is assured by a central bank, which is what we have. Parenthetically, this was a tenet of the communist manifesto. But I digress.

    Through “supervision and oversight” you may well ameliorate the concentration of control over money and credit in the banking system. The trouble is you simply transfer that control to the supervisors and regulators. And then after a time the supervisors and regulators become virtually indistinguishable from the supervisees and regulatees. Sound familiar?

    Is “fractional reserve banking” inherently insolvent? Of course it is. Does it work well with oversight and regulation? Look around. The answer is no.

    Can you eliminate fractional reserve banking? Not directly. You might pre-empt it, as a practical matter.

    Money in the form of notes has to be redeemable. The promise to pay cannot at the same time be payment.

    The way out of this mess is to cashier all debt with a jubilee and define the dollar in gold terms, making it redeemable. Of the two, the jubilee is far more urgent and socially important. This is one of the things I’ve been discussing with professor Keen.

    • #10 by moiracathleen (@moiracathleen) on January 21, 2012 - 7:47 am

      Clearly you do not know anything about the history of banking laws in the United States. And it is alarming that someone who has not studied this issue would speak openly about what needs to be done. This ridiculous behavior is what got us here in the first place.

      First, your assertion that the central bank causes the concentration of control over money and credit is simply false. I don’t dispute that Congress and the Federal Reserve have adopted rules and regulations that permit the concentration of control over money and credit, but I do not think that this happened because there is a central bank. The cause is dereliction of duty, the consequence is endangering the public welfare. Anyone who says otherwise is completely wrong.

      The fact is that in the years preceding the Federal Reserve Act this country had a major problem because there was a concentration of control over money and credit. See a picture diagram here: THIS HAPPENED WHEN THERE WAS NO CENTRAL BANK. There is a comprehensive investigation on this issue, which is known as the Money Trust Investigation. If you have not read the Money Trust Investigation, then you simply are not in a position to argue that the Federal Reserve System is the source of the problem. It is not. Admittedly, the way that system is functioning today, it is not helping, but that is a different issue.

      At the time the Federal Reserve Act was proposed there were two types of central banks presented. The first was a private syndicate of the largest banks. The second was a public arrangement. The first proposal was rejected. The end result was a compromise: a public/private arrangement.

      I am not sure how you can really evaluate the efficacy of the Federal Reserve System. It really stopped working after revolutionary changes in banking system regulation in the 1980s. The Federal Reserve System was intended to function in a system where banking system was highly regulated in terms of geographic expansion, bank size, bank activities, and deposit taking restrictions. In addition, the Federal Reserve was intended to function in a system where banking and all other business remained separate. This was accomplished through various legislative enactments, among these the Bank Holding Company Act and Glass Steagall. Similarly, FDIC insurance of deposits was intended to function in a similarly regulatory environment. Yet, today the Federal Reserve, over FDIC objections, allowed Bank of America et al to use taxpayer insured deposits to meet margin calls on its securities positions. Who in their right mind would think that the Congress would agree to these terms?

      The question is whether the banking system in its present form can restrain the concentration of control over money and credit though it does not require separation between banking and nonbanking business as well as geographic restrictions and deposit limits. The answer to this question will shape the ultimate structure of the United States economy for many years to come. It is therefore among the most important question of the day as policymakers work with earnest determination to resolve the recent financial crisis and rebuild our broken financial system. I appreciate your interest in this topic, but I do think you should better inform yourself before making arguments about how the banking system should be regulated and what went wrong. You have made bare assertions unsupported by history and recent events. This is too important of an issue to approach with such careless investigation.

      I have no argument against Professor Keen’s proposed solution for getting out of the crisis. What we do after that is an altogether different matter. I am not sure what Professor Keen’s position is on banking regulation. I would be interested in reading more about it.

  6. #11 by JMRJ on January 21, 2012 - 3:04 pm



    I can’t remember the name of the logical fallacy involved here, but when I say that concentration of money and credit is “assured” by a central bank that does not mean it cannot occur without a central bank, and I don’t disagree that in fact that has happened. I mean, how could I?

    I’m impressed by some of the arguments over here regarding “public choice theory”. I don’t know if you’ve ever run across Gary North. He opines a lot on these matters. Somewhat incoherently, I think:

    I think “regulation” is something government can never really do well. Government is too blunt an instrument. It’s much better at setting down overarching rules, very basic things, and letting everything else freely occur. There’s a difference between establishing a few simple rules, on the one hand, and micromanaging everything, on the other.

    Now, while it’s true that concentration of money and credit was a big problem even without a central bank, and even under a more or less functional gold standard, it is also true that fractional reserve banking was a widespread practice at the time. Indeed, this was one of the factors in the famous “panic” of 1907 that formed one of the justifications for the establishment of the central bank in 1913.

    One question I have wrestled with for a long time with my Austrian economist friends is: how do you stop fractional reserve banking? They don’t really have an answer. Or rather they do, by implication, but given what they say they believe they can’t come right out and identify it, because the answer is: they want to criminalize it. If this sounds decidedly un-libertarian, that’s because….it is.

    Not to mention, as the host here points out in his posts, I don’t know how “anarchists” figure that the same government they claim can’t do anything can somehow competently enforce contracts or determine property rights. I’ve asked the question. There’s no answer.

    Trying to eradicate government is like trying to eradicate sin. These things are always with us, and puritanical or utopian efforts to stamp them out tend to resemble classic examples of the cure being worse than the disease.

    Now, in theory, you could have a gold standard (Prof. Keen doesn’t like that idea, btw) and do away with a central bank. You could have “free coinage” under a gold standard too. But if you also have widespread fractional reserve banking there’s a pretty good likelihood that you’d wind up with a high concentration of money and credit, just like you did in the 19th century.

    What to do?

    Maybe this:

    There’s an economist named Michael Hudson. Prof. Keen knows him pretty well. He’s done some very interesting work on the practice of charging interest on loans, or paying interest on investments. Very skeptical of the “magic” of compounding interest.

    Ever see the movie Mary Poppins?

    I am greatly encouraged by what I’m seeing over here, not that I agree with everything. I take it most of the posters and contributors are young lawyers, or at any rate young professionals of some kind. You’re right that this is an extremely important subject.

    • #12 by JMRJ on January 22, 2012 - 1:25 pm

      @moira: Don’t have a lot of time to respond to you right now, but maybe more later.

      I agree that fractional reserve banking is not the ultimate cause of the current crisis. The ultimate cause, I think, is irredeemable money.

      Which is not to say I like fractional reserve banking. But you’re also right to point out some flaws in the usual “fractional reserve banks are inherently insolvent” mantra. I agree that this is not true, but probably not for the same reasons as you. “Insolvency” is a legal term of art used primarily in bankruptcy law. It means “not regularly paying bills as they come due”. In that sense fractional reserve banks are definitely not “inherently insolvent”. They are potentially insolvent, but that can be said of anyone.

      Then again, if you add another word you’re closer to the truth. If you said that fractional reserve banks were inherently potentially insolvent, that would be fairly accurate. Or it might be better to say that they are unique in that they are potentially insolvent by design. It’s one thing to be potentially insolvent, with the equal potential for not being insolvent; it’s another to deliberately court insolvency as your true condition by default.

      It would also be more accurate to state that fractional reserve banks are fraudulent, even if that is not technically the case. The misconception that you put your money in the bank and there it is, on deposit, still yours, is so widespread and well known that it’s fair to say it’s a deliberate misrepresentation by the banking industry.

      I posted a comment over on some other blog, critical of this one, to the effect they were mixing and matching a lot of distinct legal concepts, and not very well. Property, as in real and personal, is not the same idea as a contractual right, and neither is the same as a tort or crime like fraud. Economists seem very vulnerable to becoming quite confused about all this.

    • #13 by JMRJ on January 22, 2012 - 3:39 pm

      @moira To paraphrase Louis XIV, yes, c’est moi.

      While it is true that there are 12 regional Federal Reserve districts, this was largely a fiction to blunt the political aversion to the term “central bank”. The regional reserve banks are best thought of as branches whose only substantial function is to feed information to the decision making authorities, which are entirely embodied in the Board of Governors and the Open Market Committee at the NY Fed. The Federal Reserve “System” is in every meaningful sense a central bank, regardless of the existence of regional branches, and in more modern times they frequently self characterize as such.

      I agree with you that the market and the government have a proper relationship and should not be thought of as radically separate things. Crudely put, I would say that the government’s role is like a referee in a sports contest: it enacts and enforces rules that the players must observe. One of the reasons there is so much bitterness right now is that the government is quite blatantly favoring certain players over others and does not apply the rules even-handedly. Of course, “public choice theory” posits that the government cannot be a referee, that it’s just a player like everyone else.

      As I say, they have a point. But referee bias is a potential problem in every game, and no one gets it perfect, but on the other hand without rules and referees there is no game at all.

      My primary focus has been the very basis of the game: money itself. And traditionally, this is a task for the law, not economists. Such as the Coinage Act of 1792. It is impossible to have a coherent and straightforward economics game without defining the monetary unit of account. It’s like trying to measure the amount of concrete you need for a job without knowing what a pound is.

  7. #14 by n8chz on February 13, 2012 - 11:19 pm

    Happy hunting!

    As it turns out, I’ve been doing a similar type of hunting for some time. My political agenda is social anarchism, while yours seems to be social democracy (although I could be wrong as I’m new to the blog) but in any case I come in peace. Feel free to mine my findings for fodder for the double standards feature.

    • #15 by Unlearningecon on February 14, 2012 - 2:05 am

      Thanks for that, looks like a cool blog.

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