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The ambitious high-schooler should aim to read about thirty to fifty good novels. I did. But, I didn’t have much guidance as to what these novels should be. I mostly went on vague reputation. In general, it is best to concentrate on the nineteenth century (and earlier) classics, adding 20th century novels only as a supplement to a foundation built on pre-1914 literature. Just as with Modern Art, the orchestral music of the 20th century, or the architecture of the 20th century, the Novel of the 20th century was generally corrupt, degenerate, and not nearly as good as that of the glorious 19th. This was particularly true of those novels that are “canonized” today. I think there were probably a lot of pretty good novels, that are not remembered. There were some noteworthy accomplishments during the century, however. It was a great time for children’s literature, including the Little House, Little Britches, and Narnia series; and also science fiction and fantasy. I’ve broken the list into twenty novels from the 19th and early 20th centuries, before 1914, and ten afterwards. I tried to hold back on the Monster Novels of more than 600 pages, leaving out noteworthies including Tom Jones, Vanity Fair, and Les Miserables. I also left out a lot of books that are of more “historical” interest, such as Robinson Crusoe or Frankenstein. I am skipping some well-known books intentionally, including Wuthering Heights, which should be avoided, and Jane Eyre, which is not as bad as Wuthering Heights, but has significant degenerate tendencies. In the 20th century, I am also skipping some noteworthies that, in retrospect, are not really worth reading (Ulysses), and also much too degenerate (Portnoy’s Complaint, Lolita). I also skipped several novels that you should definitely read, although not necessarily for their “literary” content but

There is apparently some debate about whether Argentina can “dollarize” given its present foreign exchange reserves. Here at AIER, Nicolas Cachanosky argues that the Argentine Central Bank only needs to replace physical banknotes, requiring about $6 billion. Others argue the figure is $40 billion, well in excess of the present $20 billion in foreign exchange reserves. Foreign exchange reserves were actually in excess of $60 billion, before the most recent episode of dumbassery. But, so what else is new. (I wrote about this, and what to do about it, in great detail in Gold: The Monetary Polaris.) The peso has been collapsing of course. But, it is still a controlled rate. Let’s look at the Central Bank’s balance sheet, available here. So, we have 5,902 billion pesos of banknotes, coins and bank reserves, the Monetary Base. Also, we have 13,740 billion pesos of “LELIQs,” which are short-term notes sold by the central banks to commercial banks. Basically, it is equivalent to bank reserves, and thus part of the Monetary Base which is why it is alongside here, but since (I assume) bank reserves pay no interest, banks want to make a little interest on 7-14 day paper (LELIQs), especially since rates on these have been in excess of 100% per annum. All together, that is 19,642 billion pesos of base money liabilities, or about $54.56 billion. So indeed, it appears to me too that there are not enough dollars around to “dollarize” using existing foreign reserves, in a simple and straightforward way. Here is another look, from the Daily Monetary Policy Report. Now, you may say, where is the full Balance Sheet? I don’t see any Assets. This makes sense. The Assets are basically government bonds sold directly to the central bank, which are basically worthless since nobody would buy

(This item originally appeared at Forbes.com on November 7, 2023.) This has been a great year for fans of gold-based money. As part of their migration away from the fiat dollar-based international financial system, Russia has reportedly introduced widespread “gold-based checking accounts” at major commercial banks — a simple and effective form of “digital gold” — while the government of India has begun issuing gold-based government bonds. International megabank HSBC just said that it is launching a “tokenized gold” platform, making gold-based transactions possible among HSBC’s many clients worldwide. Of course there is no evidence that the Federal Reserve is going to jump on this bandwagon anytime soon. However, at the State level, many US States — actually, most of them — are tiptoeing toward creating an alternative gold-based currency platform. Following the lead of the Utah Legal Tender Act of 2011, already 43 US States have adopted legislation that simplifies the use of gold and silver coins as money. This comes straight from Article I Section 10 of the Constitution, which states: “No State shall … make any thing but gold and silver coin a tender in payment of debts.” Mostly, in practice, this has meant removing taxes on gold transactions at the State level, including sales taxes or capital gains taxes. Since Federal taxes remain, it has not led to revolutionary changes. However, some recent efforts go beyond this. Citizens for Sound Money has been developing a legislative platform that creates State precious metals depositories (as Texas has already done), and even goes so far as to create the basis for new State-issued currencies — mostly on digital platforms, but nevertheless linked to gold coin as the underlaying asset. These are all promising developments, and play a part in the “feeling our way in the dark” pattern that

Last week, I participated in the Hillsdale College Free Market Forum, a gathering of talents from academics and business. It was really a splendid event, with excellent speakers and quite an array of extraordinary people among the audience. I thank Hillsdale for asking me to speak at the event. After decades of laboring in obscurity, this has really become Hillsdale’s moment. They have stepped up to their role admirably, with a standard of excellence (displayed with their online courses for example) that really shows, in comparison, how dismal most education has become these days. This is not a matter of big promises and mediocre-or-worse execution, as you get with most colleges — rather, the execution is often better than even hopeful expectations. Among other things, Hillsdale has been busy starting a string of affiliated K-12 academies, and as you can imagine they have been very popular. This is accompanied by a lot of online resources, for homeschoolers and others in the K-12 range. This includes a whole curriculum for grades 6-12, the 1776 Curriculum. K-12 education resources from Hillsdale College I talked with some Hillsdale people about also expanding into new undergraduate colleges, especially since college campuses have been coming up for sale for very attractive prices these days. They said that they have even been offered some campuses to take over. The main difficulty is apparently finding professors that fit Hillsdale’s model. I think this may reflect the difficulty of imitating the “Hillsdale model,” that I remarked on earlier. It is not easy to find fifty good professors from a dead start, with which to construct a whole series of Departments in the Prussian University model, with a dozen different Majors. Rather, they should look into starting with five good professors who, between them, can teach a unified program,

(This item originally appeared at Forbes.com on October 6, 2023.) In 1860, the Pony Express began delivering mail between St. Joseph, Missouri and Sacramento, California. It took about ten days, with riders switching horses every 10-15 miles. It cut communication time by 50%, but it only lasted 18 months, until Western Union opened its transcontinental telegraph in 1861. Today, this task is performed by fiber-optic cables that carry 4K videos of grandchildren and stupid pet tricks. Comparing today’s Internet backbone to the Pony Express would be interesting, but perhaps not very useful. George Gilder, in his new book Life After Capitalism: The Meaning of Wealth, the Future of the Economy, and the Time Theory of Money, instead compares the Internet of today to the Internet of 2004. The ability of these glass fibers to carry 4K videos of stupid pet tricks is measured in “Lambda-bit-kilometers.” This is simpler than it sounds. “Lambdas” are wavelengths that can carry information. Think of different radio stations, at different wavelengths. Over time, the amount of information (”bits”) that can be carried by each “lambda” has increased. Also, the distance that this information can be carried without an electronic repeater (analogous to how far you can ride a horse before switching it for another, i.e., “kilometers”), has also increased. The 2004 Internet backbone used state-of-the-art gear from Corvis that transmitted 280 lambdas, each bearing 10 gigabits per second, over 3,000 kilometers. Wow. It was actually an 11,000-times improvement from 1995. But, today’s Internet backbone, using multiple fibers, carries about four million times more data than in 2004. “Aha,” you might say. “That’s amazing, but information is massless, so you can accomplish things that are impossible in the realm of real-world molecules. Once you get off TikTok, and you just want to drink a beer, then

We’re looking into Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake. September 10, 2023: Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake September 17, 2023: Gold, the Real Bills Doctrine, and the Fed #2: Let’s Review September 24, 2023: Gold, the Real Bills Doctrine, and the Fed #3: Systemic Issues You can say a lot about what was going on with US banks during the Great Depression, or specifically the downturn of 1929 to the end of 1933 when, with a combination of the RFC and Deposit Insurance, things stabilized. Almost none of this is in the book we are talking about — a little odd, since that is supposed to be its subject — so let’s take a look on our own. This is from the Federal Reserve Banking and Monetary Statistics, available here: Federal Reserve Banking and Monetary Statistics, 1914-1941 In those days, banks were classified as National Banks, all of which appear to also be members of the Federal Reserve System; State Banks that were also Fed Member Banks, and a large number of very small State Nonmember banks. There were a lot of State laws against branching etc., which led to a large number of basically one-shop banks, a single storefront. At the end of 1928, there were 15,866 Nonmember Banks, 1,208 State Member banks, and 7,629 National Member Banks. By the end of 1933, 2011 National Banks had closed, 380 State Member banks, and 7049 Nonmember banks. More than half of the National Bank closures were in 1933, probably related to the Bank Holiday and restructuring. A lot of banks also merged, with the weaker selling out to the stronger. At

We’re looking into Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake. September 10, 2023: Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake September 17, 2023: Gold, the Real Bills Doctrine, and the Fed #2: Let’s Review Normally, in good times, a bank might have some kind of problem. My own father worked for a Big Eight (later Big Six and then Big Four) accounting firm in Los Angeles in the 1980s. One of his clients was a small Savings and Loan whose customer base was largely Chinese immigrants. A rumor got out that this bank, Bank A, was in trouble. Not knowing about US banking regulations including deposit insurance, these Chinese immigrants rushed to Bank A to withdraw their deposits, and then transfer them to nearby neighborhood bank Bank B. In fact S&Ls did have long-term festering problems in those days, which began in the 1970s and were not finally resolved until the early 1990s. So, maybe this rumor had some truth to it. But, basically, Bank A was fine. It was solvent. Its assets (loans) were in good shape. The overall economy was fine. The president of Bank A contacted Bank B, where everyone was moving their funds to from Bank A. Bank B loaned the money back to Bank A. The money just went in a circle. Bank B was very happy to make interest income by lending to Bank A. Bank A was fine, and after a while, the bank panic dissipated. Nobody needed to borrow from the Federal Reserve. There was a “shortage of liquidity” at Bank A, and a “surplus of liquidity” at Bank B, which was resolved by Bank B

We’re looking into Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake. September 10, 2023: Gold, The Real Bills Doctrine, and the Fed: Sources of Monetary Disorder (2019), by Thomas M. Humphrey and Richard Timberlake Let’s review what the Federal Reserve actually did in that time. We will look at its complete balance sheet — something that Humphrey and Timberlake never do. January 26, 2014: The Federal Reserve in the 1930s #2: Interest RatesJanuary 19, 2014: The Federal Reserve in the 1930sDecember 23, 2012: The Federal Reserve in the 1920s 4: The Historical RecordDecember 16, 2012: The Federal Reserve in the 1920s 3: Balance Sheet and Base MoneyNovember 25, 2012: The Federal Reserve in the 1920s 2: Interest RatesNovember 18, 2012: The Federal Reserve in the 1920sJuly 22, 2012: The Composition of U.S. Currency 1941-1970July 15, 2012: The Composition of U.S. Currency 1880-1941 October 2, 2016: The Interwar Period, 1914-1944 (contains many links)August 25, 2017: The Interwar Period #2: It’s Not That Complicated (many more links) I also recommend that you read Chapter 6 of Gold: The Final Standard, which summarizes a lot of my investigations into the Interwar Period. Free .pdf of Gold: The Final Standard First of all, we can see that the Federal Reserve did not “contract” in 1929-1933. Its balance sheet, and base money, both expanded. There was a big expansion of banknotes in late 1931, in the banking panic that followed the British devaluation of September 1931. The British government bond was considered the “risk free asset” at the time, and it had a long history of reliability to justify that claim. When the British pound was devalued, the value of British government bonds — and all other pound-denominated debt — naturally plummeted by

Is this book for real? It smells to me like propaganda — an intentional confusion of historical events, and a load of bad theory, for the purpose of muddying the issue. Did the authors on the cover even write it? We will treat it here as if it is in earnest, but maybe we shouldn’t. The authors come from something like a conservative tradition in economics. Richard Timberlake‘s book Monetary Policy in the United States: An Intellectual and Institutional History (1993) is a reference on this topic, especially for the pre-Fed days. Thomas M. Humphrey wrote a number of interesting books, including The Monetary Approach to the Balance of Payments, Exchange Rates, and World Inflation (1982). He also worked for the Federal Reserve Bank of Richmond for some time, and was the author of a nice paper for the Richmond Fed, “Mercantilists and Classicals: Insights from Doctrinal History,” which I quoted in my first book. I used his “Mercantilists and Classicals” trope extensively in Gold: The Monetary Polaris. The book is published by the Cato Institute, which a friend of mine long ago called a “Monetarist Hangout.” At the time, I didn’t know what he was talking about. I’ve often thought that much of Monetarism is basically propaganda, and that some of its leading proponents, including Milton Friedman, did not really believe what they said, but were intentionally trying to confuse people. Monetarism is a floating-fiat currency doctrine of macroeconomic manipulation, completely contrary to the Stable Money classical ideals expressed by the gold standard. In other words, Monetarists are Mercantilists, not Classicals. From the cover, we learn that the authors thought there was “monetary disorder” in the 1930s, arising from the Federal Reserve. Many, many such claims have been made over the years — many different claims, since it seems

I wanted to spend a little more time with Classical Economic Theory and the Modern Economy (2020), by Steven Kates. This is really a worthwhile book, with many insights. July 9, 2023: Classical Economic Theory and the Modern Economy (2020), by Steven Kates Here I will simply reproduce one of the most compact and illuminating sections of the book, which highlights some of the errors of both the Keynesian and Marginal Revolution-era thinkers, and also gives a brief summary of the Classical view of recession and business cycles. This is informed by quite a lot of reading into many of the key Classical texts, up through the 1930s and 1940s. There are a couple interesting things here: I agree with the basic conclusions of the Classical thinkers, as represented here, which is that a “business cycle” or recession can be related to an imbalance between the things that are being offered in the market, and what people want. This can be exacerbated by a credit cycle, which is mentioned here also but which does not get much more commentary. These are phenomenon which can happen with an environment of good economic policy, and no policy changes — in other words, arising from the free enterprise process itself, without government influence. However, we can also see a rather big missing element — basically, government policy, for good or for ill. Good government policy tended to be assumed in the 19th century, because taxes were low and money was linked to gold. This “government policy” includes taxation, regulation, spending programs of various sorts, and of course also monetary factors. We see more commentary on monetary factors from the Austrian group, probably since Austria itself had a mildly floating currency in the late 19th century before returning to gold in 1896. Also, there