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Today, we have some “book notes” on the book Less than Zero (1997), by George Selgin, who recently retired from his position at the Center for Monetary and Financial Alternatives at the Cato Institute. I use the term “book notes” to refer to comments on books that I have not actually read cover-to-cover, in detail. But, I think we can get a pretty good idea of the basic arguments, as illustrated by some lengthy quotes that I will provide. Basically, it is Nominal GDP Targeting, with a bit of a curveball argument for a lower NGDP target than some others prefer. A lower NGDP target implies a lower CPI or GDP Deflator, perhaps even one that is, on average, negative. The Cato Institute has been a Monetarist hangout from its beginning in 1977. Some people think this is why Murray Rothbard, a cofounder of Cato, soon parted ways and helped establish the Mises Institute in 1982, which is much more gold-standard-friendly, just as Mises himself was always a gold standard fan. I’ve always considered Monetarism an error. In the case of Milton Friedman, its chief proponent, I think it was an intentionally subversive effort. Over and over again, Friedman said things that I do not think he really believed. Most politicians are no great economists, and Milton Friedman bamboozled them with pleasant free-market platitudes, as in Free To Choose. This indeed served a productive role against the big government Keynesian/Socialist movements of the time, in typical Controlled Opposition fashion. But, then Friedman would slip in his Monetarist doctrines, effectively splitting conservatives between Monetarists and gold-standard or “sound money” fans. In actual practice, he personally blocked Ronald Reagan’s efforts to move back toward a gold standard in the early 1980s. Reagan, born 1911, lived the first sixty years of his life

(This item originally appeared at Forbes.com on December 14, 2022.) Even though most adults today have lived all their lives within the floating fiat monetary system that emerged, accidentally, in August 1971, many today still probably find it rather strange that we spend so much time talking about the Federal Reserve’s current, ever-changing policy of macroeconomic manipulation, and that we actually allow this committee of mediocrities so much influence on our lives and well-being. This is not how we did things for most of US history. Before 1971, we had a very simple policy: The value of the dollar would be linked to gold, specifically at $35/oz., the gold parity that Franklin Roosevelt defined in 1933-34. Before 1933, the dollar/gold parity was $20.67/oz. This had been our basic policy since 1789 (it is actually in the Constitution, in Article I Section 10), and it helped the United States become the wealthiest country the world had ever seen. Some people think that, even despite many technological advances, the US middle class has still never had it better than it did in the mid-1960s, when the dollar was “as good as gold.” It wasn’t just the United States. Germany, Japan, Britain, France, Mexico — and even the Soviet Union and communist China — also linked their currencies to gold, in the 1960s. As long as the United States (and all the other countries) stuck to this principle, there never was a problem with “inflation.” Today, it takes about $1800 dollars to buy an ounce of gold, not $35, as was the case during the Kennedy Administration. The US dollar today is worth about 1/50th of its prior value, compared to gold. (I call it “the two cent dollar.”) Just as it takes more dollars to buy an ounce of gold, it now

A friend asked me to comment on Leland Yeager’s introduction to The Gold Standard: An Austrian Perspective, from 1983. It turns out that I actually made a few comments on this book already, which are here: May 20, 2019: The Gold Standard: An Austrian Perspective I generally thought the contributions to the book were pretty good, and that they avoided many of the errors common at that time. Leland Yeager was one of the better economists of that time, so his introduction will serve as a nice short, digestible summary of relevant topics. A gold standard is simply a policy of maintaining the value of a currency equivalent to a certain amount of gold. It is a fixed-value system. This could be accomplished, for example, with the use of debt instruments. A common money-market fund is “equivalent to dollars” for most people, with daily liquidity (conversion into actual dollars). But, an MMF holds no “dollars.” It does not hold any banknotes, or bank reserves, the only two components of dollar base money today. It has no “dollars in reserve.” If you withdraw from an MMF, the MMF does deliver real “dollars” however. In practice, these are bank reserves at the Federal Reserve, a component of base money. This is done through the commercial banking system. In practice, we may wish a gold-standard currency-issuing body, whether a central bank or a private currency-issuing institution, to hold actual bullion as an asset, or a “reserve.” We may also wish for this institution to be legally obligated to deliver bullion in exchange for currency liabilities, or “gold conversion,” just as an MMF today must deliver “dollars” in exchange for its liabilities (or actually equity). The amount of reserves such an institution can have might be high or low, from 2% to 100% or

(This item originally appeared at Forbes.com on November 4, 2022.) In the past couple years, we had a gigantic debate about “inflation,” where anything and everything was discussed, without a lot of resolution. The only thing that seems to have been decided on was: Whatever the cause of “inflation,” the solution has something to do with the interest rate target of the Federal Reserve. Why is this? As we were planning our recent book Inflation: What It Is, Why It’s Bad, and How To Fix It, we kinda knew this was going to happen. That’s why, on the cover of the book where people would notice, we suggested that common interpretations of “what it is” and “how to fix it” were wrong, or at least unproductive, and that there were better solutions — solutions that are not just our creative notions (too many of those these days), but things we actually did in the US over a period of centuries, and they worked. It’s an easy book to read, but to make it even easier, here it is: The word “inflation” indicates a vague hodgepodge of notions having something to do with rising prices. We separate all the various things that might influence prices into two basic categories: Monetary Influences (basically the central bank, or the currency), and Non-Monetary Influences (everything else besides the central bank). This is no great insight, but nevertheless, it is something that most people ignore. Today, the basic thought process is that there’s a Consumer Price Index which is X, and if this X is in excess of the Federal Reserve’s stated target (now 2%), then the Federal Reserve should address this with Higher Interest Rates. It’s true that, during the 1970s, “inflation” was almost entirely due to monetary causes. In March 1980, the Consumer

This year, I reread Richard Salsman’s 1995 book Gold and Liberty, as a counterpoint to the recent The Gold Standard, Retrospect and Prospect. Both books were published by the American Institute of Economic Research, or AIER. February 27, 2022: The Gold Standard, Retrospect and Prospect #6: International Monies and Digital Gold December 22, 2019: Gold and Liberty, by Richard Salsman The book is available here: Read Gold and Liberty. In 2019, I made only a brief mention of the book. Today, I will say a little more about it. I would say that Gold and Liberty is the single best book about the gold standard maybe since about 1950, up to the publication of my own Gold: The Once and Future Money in 2007, and some other very good books that have followed since then. Actually, I don’t know of any single book from before 1950 either that I would say is better. So, it is pretty good. The approach, or background, is a little different than mine. One nice thing about the book is that it has a long list of references that I was not familiar with. It has a little different stance than me. I tend to emphasize centralized systems, such as today’s monopoly central banks. Salsman and many others argue toward “free banking” or other private-market-flavored solutions, arguing that government money monopolies are too prone to corruption. Both could work. A private-market solution (let’s say, a gold crypto stablecoin) is more likely to be successful in the West, or some other places like India, where it doesn’t seem likely that governments will ever have any interest, or expertise, to put together a functioning gold-based currency. But other countries — let’s say, Malaysia or Qatar — might be very friendly toward a gold-based domestic currency, in the

(This item appeared at Forbes.com on September 25, 2022.) James Turk has long been a friend of gold. The founder of GoldMoney in 2001, and also the author of the Free Gold Money Report over many years, summarizes some of the knowledge collected over his career in a new book, Money and Liberty: In the Pursuit of Happiness and the Theory of Natural Money (2021). I have been on the lookout for a “shelf of books” from contemporary authors, that can serve as an intellectual foundation for a new era of Sound Money (money based on gold) in the US and throughout the world. Turk’s new book contains plenty of insight and timeless wisdom, updated to our present times and current concerns, and serves as a one-stop source of much “gold lore” that is necessary for anyone interested in these topics. I imagine it as a sort of textbook especially for younger people, who instead might have to look here and there for scattered bits and pieces, and then have to sift those for error and fallacy. I have done this, so I know that very few will undertake such a task; and of that already small group, very few will successfully toss out the accumulated garbage of decades to find the pearls of wisdom within. In other words, it helps to have a guide. Turk dedicated his book to his two sons, suggesting to me that he had something like this in mind when he wrote it. My own books have tended toward a somewhat technocratic approach — the economic equivalent of “rocket science” — so I am glad to see someone express some of the broader principles of statesmanship whose purposes these technocratic methods serve. Chapter Two describes the core role that money plays in our “pursuit of happiness,”

(This item originally appeared at Forbes.com on September 17, 2022.) Over the past year, there has been a deluge of commentary about “inflation.” This has included my recent book coauthored with Steve Forbes and Elizabeth Ames, appropriately titled: Inflation. In that book, knowing the ruts that economists have found themselves trapped in for decades, we anticipated the likely course of discussion, and outlined some alternatives. Let’s see how things have been stacking up. On the book’s cover itself, we anticipated that even the word “inflation” — which I have recently been putting in quotes — is a term of some confusion. This has turned out to be the case. People seem as confused as ever. The term arises from popular speech, and tends to become a grab-bag or stew-pot of all kinds of things that could conceivably cause the Consumer Price Index to rise. In the book, we began our analysis by segregating causes and effects that are inherently nonmonetary in nature, and basically amount to some kind of supply/demand issue in real-world goods and services; and those that are inherently monetary, and basically amount to mismanagement of the currency, and do not arise from any supply/demand issue in the real economy. The study of economics itself has tended to cleave along these lines. The Keynesian-flavored economists tend to focus on the supply/demand issues, often summed up on a macro scale as “aggregate supply and aggregate demand.” Their frameworks inherently tend to assume a currency of stable value. Keynes himself was not so naive. But, after Keynes’ death in 1946, his various acolytes, hemmed in by the Bretton Woods gold standard system that mostly managed to keep currency values stable, tended to simplify their inquiries to nonmonetary factors alone. Thus, they were befuddled when their core assumptions — stable currency

I was honored to be asked to say a few words at the Newport Global Summit, a really extraordinary gathering of extraordinary people. Here is my presentation for that event. Click here for a .pdf of my presentation.