Dan Scanlan wrote: > ... Today I watched an interesting video at > http://www.brasschecktv.com/page/585.html that gives a bit of history of the > banking industry. Once again I'd like to ask a stupid question. I realize > that many members of this forum have more important things to do on a daily > basis, but if anyone does take a gander at this film, I'd be interested in > knowing its flaws.
I couldn't watch the whole thing (my wife started a phone conference), but here are my comments on what I saw. There are a lot of valid things in it, but they are commonsensical. But the stuff about Rothbard and the von Mises Institute at the start should tip you off: it's right-wing stuff. It also looks likes a "monetary crank" film: there are a lot of things wrong with the world (stagnant incomes, etc.) that can be solved by our monetary solution (the gold standard). They seem to imply, for example, that Social Security's imminent demise would be prevented by their solution. Luckily, SS is far, far from bankruptcy, so it doesn't need their solution. In fact, I'd guess that the "Austrian" economists (Rothbard, etc.) would like it if SS failed, since it goes against "free market" principles. They also say that inflation steals from our savings accounts. That's true -- except when it isn't. Sustained but moderate inflation eventually leads to higher interest rates which protect our savings. In the long haul, the "real" (inflation-corrected) interest rate isn't negative, as long as we avoid hyperinflation. A strong power like the US is quite unlikely to slip into the latter trap. The quote by Rothbard at the beginning about the Fed being not being responsible or democratically accountable is right on the money (as it were). However, these folks are not in favor of subordinating the Fed to democratic control. Instead, they want the gold standard, seemingly to make the Fed subject to "nature." They miss the fact that the Fed is largely subordinate to bankers, Wall Streeters, and a non-Austrian brand of conservative economics. This means that the Fed also has inflation-phobia, but not as strong as the Austries' version. The Fed's decision-makers know that mild inflation "greases the wheels of commerce" (i.e., is good for business) and that economic collapses like the one we're in right now justify taking inflationary risks as a solution. The Fed also hates the deflation that the Austries like (as when the economist says that he wants the value of money to _increase_ over time, a normal result of the gold standard). Since the Great Depression, serious economists have known that deflation can be really bad (making recessions worse). Even without a debt-deflation depression like the early 1930s, deflation is bad for debtors, as the 19th century populists knew. Maybe we could deal with that by getting rid of credit, but that's hard to imagine under capitalism. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
