2013-12-22
Perhaps the prime problem that society faces is that of violence. Every individual is capable of violence. And even if 99 percent of individuals do not engage themselves initiate violence, the actions of the few that do employ violence, if left unchecked, can be terminally destabilizing for society. The hallmark of modern society is the existence of robust institutions that constrain violence,...
2013-12-01
I’ve been making my way through one of Ralph Hawtrey’s classic works, The Gold Standard in Theory and Practice . The book is both highly readable and insightful. Of interest today is Hawtrey’s narrative of the classical gold standard. Gold and silver were both used for exchange in commerce throughout much of recorded history. It was not until the 1870s that the western world moved to a uniform...
2013-11-20
In 1990, Milton Friedman published “ Crime of 1873 ”, an article that comprised a chapter in his Money Mischief – a book that is generally underappreciated, though not by some of my favorite monetary theorists . Friedman’s thesis is that the Crime of 1873 was actually a crime, though perhaps not in the legal sense: Whether or not a verdict of "guilty" would have been appropriate in a court of law...
2013-11-16
A couple weeks ago I came across George Selgin’s work on Great Depression era monetary theory. In “ Hayek vs. Keynes on How the Price Level Ought to Behave ” Selgin notes many of the same issues that I have been recently reviewing. Of particular interest is Hayek’s changing views on deflation and price level stability. Hayek started in the 1920s with “a general indifference to deflation, whatever...
2013-11-12
I’ve recently grown interested in testing the predictive value of changes in relative prices as opposed to changes in the price level. So when I found myself with a few extra hours the other day, I ran some preliminary tests using the Saurbeck-Statist Index. The Sauerbeck-Statist Index was published yearly from 1846 to 1948. It employs several baskets of commodities that are merged to form...
2013-11-02
I am currently busy working on a new project which has kept me away from blogging over the last week. In researching I have stumbled upon a fact that is revealing of late Hayek. It seems that he never came to terms with absolute inability of government adhere whatsoever to any fixed standard. In Denationalization of Money , he writes: One might hope to prevent the violent fluctuations in the...
2013-10-29
In 1949, Hayek reflected on the success of socialist ideology and the waning of classical liberalism: In particular, socialist thought owes its appeal to the young largely to its visionary character; the very courage to indulge in Utopian thought is in this respect a source of strength to the socialists which traditional liberalism sadly lacks. He closes the article by arguing: We must make the...
2013-10-25
The other day I had a conversation with Garett Jones about the sources of dysfunction in the medical sector. After I rattled off an explanation in which I cited barriers to entry, the revolving regulatory door, and systematic control of journals by departments whose interests are aligned with big-pharma, etc… he asked, “What do you think the R-squared is for that?” In other words, on a scale of 0...
2013-10-23
I finally got my hands on Good Money, Part I which is a collection of essays from Hayek on international monetary conditions during the interwar period. It is an ideal set of essays for anyone who is interested in understanding Hayek’s disposition toward the gold standard. Today I shall concern myself with two points of Hayek’s analysis from 1924: 1) Hayek stresses that Federal Reserve operations...
2013-10-20
In 1961, Milton Friedman gave his speech, “Real and Pseudo Gold Standards” to an audience at the Mont Pelerin Society (I am unable to find the attendee list, but I assume that Hayek was there as it was his final year as president). At the time, much of what Friedman said was probably not met with great disagreement from Hayek, but I find it instructive to compare Friedman’s speech to Hayek’s...