Commentary

0:00Okay, well, fortunately, Paul was the one person who actually didn't go over time. I think the moderator needs to be given a taser or something, because otherwise it's just sort of embarrassing. I'm holding up signs that, you know, might as well say, you know, draw a square circle, please, because they're not listening to me. Okay, let me... I was originally going to leave time for Q&A. I don't think we're going to have to. Let me just go through and comment on these papers. Obviously, in ten minutes, nine minutes now, I'm not going to be able to Do these papers justice? So let me just say a few observations for each one. For Guido's paper, he's touching on at least two very important things. One is the whole concept. What was he doing? He's talking about he wants to discuss the value, what's contributed by the existence of financial markets. And people take that for granted, but it's just driving me crazy with the analysis of the financial crisis right now when people

0:57We'll keep talking about, using this phrase, hopefully we thought we could contain it, but it's spreading to the real economy. And I alluded to that in an earlier session, but when you think through what that means, it's really scary that they're thinking the financial markets don't have that much to do with, or we could build a firewall in between the allocation of capital and the real stuff going on. When you think through the implications of what does that mean if someone is analyzing things, thinking that over here is the financial sector, then you've got the real economy. In Fairness, I understand when you're starting out, you've got to do price theory, things you do in real terms, then you lay money on top of it. I understand where that's coming from, but my point is just when people are analyzing the situation like today and using phrases like that, it's pretty scary. So I'm glad he's looking at this. Another great point that he was bringing up is this idea that hoarding per se, first of all, it doesn't destroy real wealth.

1:51The Keynesians are wrong when people hoard, it doesn't necessarily hurt things because you give it to the bank and then the bank lends it to somebody else and he spends it. The way that many free market economists combat the claims of the Keynesians is not to dispute the notion that spending is what drives things is that they say no no no actually when people say that it does get spent don't worry about it it's not really lost because it gets you know I'm saying so that's what's good about Guido is he's shown that even if it isn't spent even if you did put it under your mattress that that's okay because it's not the money you know per se especially for on paper currency that's the source of wealth that's you know tractors don't disappear because somebody put something in his piggy bank right so that's Moving on, Joseph's paper on William Douglas. He did read some quotes, but again, for those who are interested in that sort of thing, I would encourage you to email him and get copies of it because, for one thing, the way those guys wrote back then is very refreshing. Their titles are 16 lines long, a discourse upon that, and they spell politics with a CK at the end. That's always fun. That sort of stuff, but truly, it is nice.

3:11My one recommendation would be to include some more quotes from his opponents, just so the reader can understand exactly what was he knocking down, as opposed to just summarizing in the text, this was the prevailing view and then this is what Rothbard or William Douglas set against that. Just a few other things that occurred to me, I was talking about people were intimidated by William Douglas because of his medical knowledge, but I think I know what doctors I would be afraid of a doctor as well, so that was another random thing that occurred to me, it might be a good argument against fiat currency, he was talking about the orgy of paper money, so I think you could say to someone, if you're going to have an orgy, do you want to involve paper money, you know, and I won't even discuss a pun involving hard money.

4:03Okay, it's a good thing I don't have much time. Let's go on to Paul Swick's paper. The best thing about his paper was the abstract, which literally, I'm making this up, just says, this paper examines something that's kind of cool. That's the abstract. Now that's actually probably not good in terms of getting it placed in a mainstream journal because demonstrated preference, they obviously don't like papers that discuss something that's This is kind of cool, so I think most Muslims say this is not for us. Seriously, the one thing I would like Paul to either, you know, explain, maybe he can tell me afterward, explain this paper, this issue, this is a serious issue for, in the Austrian literature as well, this issue of, it's relevant right now, were Lyle Robbins and Hayek, were they responsible for worsening the Great Depression?

4:57and there's quotes, if you know Brad DeLong that name, he's a guy who's done some history of thought work on this and he's real big on, you know, the crazy Republicans right now are just like the crazy Austrians back in the 30s and what those people were doing back then was saying that, you know, the recession or the depression is good for us, you know, it penalizes us for the sins of the 20s with the Fed's expansion and, you know, you need liquidation. So DeLong's point is Hayek was just like the caricature of Mellon. liquidation and DeLong saying and even Milton Friedman recognized that this is crazy and then so what Larry White among others has done is to go back and show that well it's it's actually pretty nuanced what's going on there that there's a distinction between talking about you know not inflating or correcting the excesses of the of the malinvestments during the boom versus the sort of on top of that additional disturbances caused by the fact that

6:26It's just in general, we're afraid. So it's not just because, oh, I took out loans and my business grew more than it should have, but you can imagine even people who are running productive businesses, even with 100% reserves, it could just be this general panic and maybe that's why your business gets hurt. Is that also what Hayek said the government should expand to counteract that, or is it merely to counteract the fact that when people pull reserves out of a fractional reserve system, the whole money supply has to shrink because because of the reserve requirement. Okay, finally with Paul Prentice's remarks, again a very important topic and I've been noticing, maybe many of you have seen this too, that people, and at first they're joking but they're not really joking, it's getting more and more serious where people will say things like, you know, I see comedians, literally I've seen comedians say things like this, so my credit card company keeps calling me, you know, saying I owe them all this money

7:50I said in the beginning it was sort of jokes and people make, you know, when's my bail out coming? But I mean it really is, more and more people are talking like that and I think it's very true that it erodes the confidence, the belief in property rights and the sort of stigma against just violating contracts and stealing from people when the government's doing it right in front of your face and just so clearly, nakedly giving out tons of other people's money to groups because they're politically powerful. So one suggestion I would have for Paul's paper is this issue of, it is very nice, and certainly there's a way to say it correctly, but there's also some people say it a bit naively, this issue of when you deficit spend, oh it's like we're taking wealth from our grandchildren, and I'm not saying Paul did this, but just to be careful about this possible misinterpretation, Mises points out in several places that you know in the strictest sense everything that is

8:51produced today is out of present resources right so it's not like if we have a war and we can say do we want to borrow money and do it and say or sorry if we want to use it from tax revenue we'll know people would be up in arms okay well let's just borrow it and do it with borrowed funds that it's not literally that your grandchildren are you know you they're not taking time machines and pulling resources from 50 years in the future to make tanks now I I mean, the tanks are being made out of steel right now, all right? So that's, like I said, it doesn't mean that you can flip the other way and go, oh, we just owe it to ourselves, so there's no issue, you know, government borrowing is fine, you don't want to flip the other way, but it's actually very subtle to think through exactly what's going on and who's getting burdened, because, you know, your grandchildren, the people who are the

9:37grandchildren of those selling the bonds, you know, the bondholders that are getting those payments, they're obviously better off, so it's not an issue so much of intergenerational Transfer. It's more of the people lending the money to the government whose kids are then going to be the recipients of the taxpayers in the future who are going to be net losers. So it's not so much our generation versus them. It's more the people who are in cahoots with the government versus the other taxpayers who aren't the ones lending the money. Okay, we're out of time. Thank you very much.