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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

Lawrence White has been one of the very few academics I can name who has been a consistent advocate for the gold standard, as a monetary policy. There have been others who have done a pretty good job of historiography on the gold standard era, with Michael Bordo perhaps the best example. (There have also been quite a few whose historigraphical efforts are completely laughable, or corrupt.) There have been a few, mostly younger academics such as William Luther and Alexander Salter, who sometimes say some nice things about gold, but in the end tend toward NGDP Targeting or other solutions, which are completely contrary to the principle of a gold standard, which is this: This internal inconsistency of thought does not seem to bother them very much. I think it has something to do with how Millennials have been educated. White has written a number of papers over the years, of notable merit, so it is nice to see him collect some of his thoughts into a book, which is much more permanent than papers, and which other people can learn from. (He should collect his papers into book form as well, since books are easy to make these days.) This book is: Better Money: Gold, Fiat or Bitcoin? I was hoping for, and let’s say expecting, something like a basic primer on basic principles for a lay audience, that doesn’t know much about these topics. However, this is not the character of the book. Rather, it consists of a number of rather detailed investigations into specific topics, which have been items of discussion recently. This is also worthwhile. The first topic takes up the question of whether “money” can be defined basically out of thin air by government fiat. This is a response to various “Chartalist” arguments which

The League of Nations produced excellent international economic statistics for the 1920s and 1930s. They are available here: https://digital.nls.uk/league-of-nations/archive/190788539 Unfortunately, they only go back to about 1921. I was looking for stats that cover the prewar-wartime-postwar transition.

Classical Economic Theory and the Modern Economy (2020), by Steven Kates, kept coming up in the list of books that Amazon.com recommended to me, while I was searching for other books. Score one for the algorithms that run Amazon’s recommendations, because this oddball little book really is the sort of thing that I like, and which serves and important role today. The author is an Honorary Professor of Economics at RMIT University (since when are universities getting acronyms?) in Melbourne, Australia. The book begins with this paragraph: Writing this book was an odd experience, since the premise of everything found within the rest of this book is that just about the whole of modern economic theory is perniciously wrong, that other than here and there, such as in its opposition to rent controls, there is virtually nothing useful one can learn from a modern economics text in how to manage an economy. (p. 1) So …. tell me what you really think. But, that is also the kind of thing we write about around here, isn’t it? That’s why this website exists. The author was fully trained in the usual Keynesian or whatever they call it, “neoclassical” rubbish that you find in universities. Then, he had a real-world job for 24 years as the economist at the Confederation of Australian Industry, “which had the most profound effect on my intellectual destiny.” In other words, unlike most academics who just mumble dogma in ivory towers, Kates had to investigate and interact with the real world economy. He was being paid by businesses, to craft real-world proposals for business-friendly policy to the Australian government — not groveling for tenure by babbling dogma to other academics. This experience was so shocking, that the whole second chapter is entitled: “The purpose of this book

(This item originally appeared at Forbes.com on June 9, 2023.) There never has been a wealthy country without a few extremely wealthy people, and a lot of people who are destitute. Sometimes “wealth inequality” is a problem; and sometimes, it is just something that normally happens, even when everything is going about as well as it ever could. Ancient Greece was an amazing laboratory of government, with dozens of small city-states that would periodically swing between monarchy, dictatorship, aristocracy, oligarchy, and democracy. Aristotle wrote about this in his Politics, which became a central text to the Founders of the United States. Some city-states got into a destructive cycle between oligarchs and democrats. The oligarchs would arrange things to exploit the common man; the common man would eventually kill off the oligarchs, and take all their property. This was a double cycle of destruction, and resulted in impoverishment. The result was that the city-states became weak, and were eventually taken over and ruled by the monarchs of Macedon, who provided some much-needed political stability. Thus, “wealth inequality” was a problem when the oligarchs “exploited” the common man. This “exploitation” was easy to see, or define, because it meant the impoverishment and worsening conditions of most of the population. This was typically achieved with concentration of agriculture, forcing the freehold farmer to become a tenant serf of absentee landlords; usury in the form of exploitive lending (often leading to the loss of property and serfdom); and exploitive taxation. Short-lived democracies strove to cancel debts, reduce taxes and redistribute farmland. But, governments based on theft, plunder and abrogation of contracts typically did not last for long. Soon, people welcomed back the oligarchs, to kill off the democrats and establish private property rights again. Today, “wealth inequality” might be a problem when it means a

Somewhat unexpectedly, I’ve been doing a lot of talking about “commodity basket”-type monetary proposals. The basic gist of these is that a commodity basket is a good proxy for Stable Value. But, the typical (actually only) argument for this is basically the assumption that commodities are a good proxy for Stable Value, by definition. I think that commodities, individually and also as a group or “basket,” have a lot of price (or value) variation basically due to supply/demand issues of commodities. I think that gold is far better proxy, or approximation, of this Stable Value ideal. And, as it turns out, everybody also agrees with me. The whole monetary history of humanity from prehistory to the present has been the abandonment of all other commodity bases for currencies, except for gold. If you don’t just assume upfront, without argument, that commodities are better than gold, and you actually think about it, you usually conclude that gold is superior, just humans always have for thousands of years. That is why the people that think about it become gold standard fans. But, let’s set that aside and talk about something else. If a currency either rises or falls in value a lot, this will likely be expressed in commodity prices. Commodity prices go up and down a lot for their own non-monetary issues, but if a currency rises a lot (“deflation”) commodity prices are nearly certain to fall, as measured in that currency; and if a currency falls a lot (“inflation”), then commodity prices are nearly certain to rise, as measured in that currency. However, the rise in commodity prices (vs. a currency) tends to lag the rise in the price of gold vs. that currency. In other words, the commodities price signal has about a year lag, compared to gold. You