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Advertisements for Myself

For a couple of my books, actually, which have recently become available in new editions.

Good old Liberty Fund has made a Kindle version of The Theory of Free Banking, which you can download for free from its Online Library of Liberty.

And my pals at the Independent Institute have just released the paperback version of Good Money, which they sell for just $22.10. That might not seem terribly cheap for a paperback, but bear in mind that this one reproduces the hardback's generous color-plate insert. Besides, it's a damn good book.

Personally I think the relative prices are about right. Not that I don't like The Theory of Free Banking.: it's just that I've come to think that an ounce of convincing history is worth at least a pound of theory. And what writer doesn't imagine that he's learned a thing or two about writing in the space of two decades?

But you needn't take my word for it. Just get them both, and decide for yourself!

  • Paul Marks

    There is a vast difference between writing internet posts and writing proper books.

    Whatever my differences with you on policy (and they are lot more minor in reality than they are in my sometimes hot tempered words) I profoundly envy your skill at writing proper books.

    The closest I came to that was a work on Edmund Burke some years ago (not exactly well recieved), these days I would not even try – too many blows to the head (and just natural ageing) since then.

    • George Selgin

      Thanks for your kind remarks, Paul. For what it may be worth, I can assure you that my head still aches from the ordeal of writing Good Money, and even more so from that of trying to get someone to publish it!

  • Paul Marks

    That is good to hear – not good that you are in discomfort, but good to hear that you made a real effort.

    Those who can do – those who can not (like me) can only be critics.

  • Desolation_Jones

    I would love to get a get a book version of The Theory of Free Banking, but all the used copies are horribly expensive.

  • I am on the last chapter of The Theory of Free Banking and highly recommend it, even if one simply just wants to read more about the history of monetary thought. The nice thing about the e-reader format is that you can store your highlights and notes in the cloud for posterity. I know I have several notes to look back over to formulate some hopefully competent questions.

  • RickDiMare

    George, I just started reading your book "Good Money" (incidentally, you're an excellent writer) and already I'm starting to see why the framers of the U.S. Constitution created a fully-public entity in 1787 (which we now call the U.S. federal gov't) to issue coinage, and to make that money-creation coining power exclusive to the Treasury Department (so, no, I must respectfully disagree that the coining power should be shared with the Federal Reserve, or any other private party or corporation).

    In other words, maybe because I'm prejudiced by my legal research and training in U.S. law, I fully agree with Charles Goodhart's comment in your book's Forward:

    "Selgin, I would guess, sees the almost universal provision of currency by the state as an unnecessary and undesirable consequence of coercion to protect a profitable monopoly (seignorage). In contrast, I see the state's role in this respect as the almost inevitable consequence of the fact that the state is–admittedly in large part because of its coercive and tax powers–the most creditworthy institution in the country. Whichever of us may be correct, it makes no difference to the fact that this is an excellent and fascinating book."

    • George Selgin

      Tnanks for your comment on Good Money, Rick.

      As you don't explain your reasons for sharing Goodhart's view I can't answer you directly. However I can at least observe that Goodhart's statement about the government being "the most creditworthy institution in the country" has always struck me as being entirely unfounded. What distinguishes government from the private sector isn't that it's credit is particularly good but that it can renege on its promises with impunity. There may consequently be no "credit" risk in the usual sense attaching to the IOUs of a government authority–no risk that the issuer will fail, that is. But there is instead "sovereign" risk, that is, risk that it will devalue (which isn't a factor for truly private firms). Under a gold standard it is thus perfectly possible that overall riskiness of privately-issued gold-denominated IOUS is less than that of their counterparts issued by sovereign authorities.

      Also, the "creditworthiness" of the private sector is not that of any single enterprisae but that of what may be a large number of competing enterprises each of which commands relatively modest credit. As a matter of fact, as I observe in my book, the British public demonstrated its relatively strong faith in such enterprises when, in the heyday of the private coinage episode, it accepted local private coins at their par value, which typically accepting nominally equivalent coins bearing the Royal Mint's markings at a 50% discount, if at all; I also tried to make clear why the public's preference was perfectly justified. The same preference for private coins over official ones prevailed as well in the U.S. private coinage episodes of the Appalachiaqn and Californian gold rush eras.

      So, it is easy enough to assert that the credit commanded by government mints is greater than that which private alternatives might command. But unless your "legal research and training" has supplied you with evidence to support the assertion, as I have provided evidence that appears to me to refute it, I don't see why any weight should attach to it. The question then becomes whether you are in fact prepared under any circumstances to abandon your prior convictions, and if so, what sort of evidence or argument could in principle cause you to do so.

      • RickDiMare

        I'll keep considering your comments, George, but I guess I don't see how it's even remotely possible to privatize the money-creation power under the U.S. legal system, particularly when I consider how it's evolved along with taxing powers during and after the Civil War.

        Also, I see the money creation/distribution process under the Constitution as more important than national defense, as the source of most property rights, the protection of which is government's primary role, so I want that monetary power integrated with the government's power to physically protect property (by using its legal system to make life as difficult as possible for tyrants, and others who only yield when checked by overwhelming force, a level of force which I cannot provide for myself).

        Stated differently, had our system of government, along with its unique tax and money-creation powers not evolved the way it did, I believe we'd still be tolerating slavery, an American institution that was a testament to how intractable and self-justifying tyranny can be.

        So, while I agree with Hayek when he said something like "the market wants to go somewhere," I don't believe that "somewhere" is a good place if the market (and its life blood, money) is not properly supervised and regulated.

        I don't know if I've provided sufficient "evidence" to support my agreement with Mr. Goodhart's quote, other than perhaps evidence of my pessimistic view of human nature.

        • George Selgin

          "The money creation/distribution process under the Constitution" is no "process" at all: the Constitution does nothing more than grant Congress "the right to coin money and regulate the value thereof" where "regulate the value" meant nothing more than "specify the gold or silver content of particular coins." The power in question has no connection with the government's role in protecting private property rights, this last being a responsibility not of Congress but of the courts, the charge of which consists as well of protecting citizens' property from the illegitimate takings of Congress itself!

          Far from applying it toward the end of protecting their citizens' property rights, governments have in fact taken advantage of their "prerogative" of coinage to engage in some of the most rapacious of all uncompensated "takings" of private property. This fact alone ought to be sufficiently notorious to put paid to the suggestion that the coinage prerogative is somehow the "source" of other property rights.

          In any case, I don't at all see what it shouldn't be perfectly possible "to privatize the money-creation power under the U.S. legal system," provided of course that some laws can be changed. There's no need at all for "legal tender" for courts to work (Scotland, for one, manages without); and public payments can be and usually are affected with private money (the IRS, for one, insists that you send a check rather than cash). Everything else is a question of how private suppliesw will be managed, which is what I endeavor to explain in my books. Certainly the evidence shows that government isn't needed to produce little round engraved metal disks, or to put them into circulation. So wherein does the "impossibility" reside?

          • RickDiMare

            I have to agree that presently the system isn't working properly. Access to Treasury-Direct current coin is essentially denied because it's been made so inconvenient to use, whereas different electronic ways to use central bank money are proliferating and becoming increasingly convenient.

            So, yes, Congress is neglecting its duty and abusing its power, but the fact remains we have legal power to demand current coin (if only I could find other lawyers who agreed).

            Once central bank money has been successfully rejected, then "natural persons" have opportunity to claim that their labor is property under the Direct Tax Clauses, a claim that cannot be made while using income-tax-regulated Knapp/Keynes money under the Indirect Tax (or Uniformity) Clause.

            Although this property right has been totally obscured by the present system, it is historically unique and unprecedented, and probably only exists under U.S. tax/monetary legal history because of our slavery roots, so that's also why I can't see privatizing money, i.e., because there is this connection with the monetary system, this unprecedented possibility that government will recognize its Constitutional duty to protect a property right in a natural person's labor.

            Of course, this could be a pipe dream, but we'd basically need to bury the Constitution and 200 years of legal history, and I don't see that happening either.

      • RickDiMare

        George, regarding your comment that government-issued coins tend to be less creditworthy than coins produced by the private sector, I was recently blogging with someone regarding the "melt value" of current coin:

        After I responded that "melt value" has little to do with the term "dollar," which is a psycho-political standard that is usually independent of a coin's intrinsic value, he responded (see below). To me, he seems to be saying that the main advantage of U.S. gov't-issued coin is that the gov't can assure uniformity, and thus, in a collapsed economy gov't is most likely to produce a coin that the market trusts.

        If you can reply, as always, I'd be interested in your view. (If I'm understanding your book "Good Money" accurately, you seem also to agree that having too many private issuers, even though they produced higher quality coins that were in great demand, caused much doubt and confusion in the marketplace, not to mention how counterfeiting problems seemed to grow exponentially when there were numerous privately-issued coins circulating.)

        Anyway, here's what he said:

        "In a collapsed economy, the coining authority doesn't set the value of money as it attempts to do today, rather it must maintain a standard of uniformity or the market will reject its "standard" and find another that it trusts. Existing US coins can be trusted because each is mint dated therefore its metal content and purity is known to the market.

        The basis of a commodity is fairly constant. The idea of melt value attempts of create an understanding of what the commodity value is in terms of currency value. The lesson here is not what is the currency value of US coins, but what is the intrinsic value of US coins vs. fiat paper currency (i.e. notes unbacked by any commodity). It is useful for one to remind oneself periodically that fiat paper currency is not worth the paper it is printed on and can and will lose all of it's purchasing power and nothing but sentiment holds that value in it today. The same goes for electronic and ledger entry currency accounts in banks. In effect, the current monetary system is a bubble that will eventually burst and destroy itself. We know this because every fiat currency system ever used in the past has busted and their notes are worthless and untradable today.

        When people begin to experience a significant loss of purchasing power with fiat paper currency, they will (and are) fleeing from holding it. Metal coins sometimes can experience the a loss of purchasing power, but only to a point, that point is melt value. Melting converts that coin from a currency token into a commodity. The dollar value associated with melt value is merely a conversion of the market value of a commodity (say copper) so that one can gauge the market value of the commodity vs another commodity (say a gallon of milk) in the current market.

        Once the market value of fiat paper currency collapses to its true market value (nothing) people will be forced to trade in some other standardized measure of value. I believe that standard will include copper US coins simply because they are plentiful, ubiquitous, and easily identified by face and date as to what their copper market value, and therefore purchasing power, will be. Silver and gold will be tradeable as well, but they are not widely held by the consumer, but copper coins are, and copper has an industrial use, so it will continue to be tradeable for scrap value (which will be a price fraction in gallons of milk (or whatever commodity the market wants to pick as a standard conversion value), even in a full collapse of the current monetary system. Paper will have no value at all. And keep in mind that a metal that has no industrial or practical use (like ounces of gold) can experience a loss in market confidence as well and fail as a standard."

        • George Selgin

          Rick, my reply is simply that the feloow you quote seems unaaware of either the long history of government abuse of coinage and of the evidence from those rare occasions on which governments failed to enforce their coinage monopolies. The economics literature is unfortunatly jammed with writings such as his, in which "imaginary" empirics stand in for the real thing.

          In any event the suggestion that a fiat money inflation must ultimately lead to people's reverting to metallic standards based on the intrinsic or melt value of existing token coins seems to me perfectly ludicrous. More likely it would simply lead to the disappearance of small (and nominally undervalued) change, as has happened many times in history.

          • RickDiMare

            George, I hope at least a few Treasury Department lawyers are listening in on this blog because their inaction, or affinity for the central bank, is responsible for, as you describe, a failure of the U.S. government to enforce its coinage monopoly.

            U.S. lawyers in general, particularly the grossly-overpaid tax attorneys in the private sector (I've heard some are making over $1,000/hr.), are unnecessarily jeopardizing the entire American experiment by not enforcing the U.S. coinage monopoly.

          • RickDiMare

            "But when should people strive their bonds to break,
            If not when kings are negligent or weak?" Dryden, 1681

            (From "Good Money," Chapter 4)

  • RickDiMare

    George, I hope you don't mind, but in an attempt to contrast our present-day central bank monetary system with the Constitutional coin-based system that was really intended for the U.S., I'd like to quote passages in your book "Good Money" where you mention Thomas Jefferson, and also to point out to readers the Coinage Act of 1792:

    "Before long, Droz [a Swiss engraver and mechanic] himself showed up to demonstrate his collar to Boulton and Watt and also to Thomas Jefferson, who happened to be present gathering ideas for his own country's coinage." Footnote: " … several months after Boulton and Watt's visit, on February 18, 1788, Droz 'reported to Boulton from Paris … that representatives of the American Government had visited him, but that he had shown nothing to any of them but Jefferson.' Jefferson eventually tried, unsuccessfully, to get Droz to come to the United States." Good Money, page 94.

    "On April 7, 1790, Mitchell's proposal [to coin money in Britain for the American Government] was laid before the U.S. House, which referred it to Thomas Jefferson in his capacity as secretary of state. Jefferson reported back on it a week later. He was, of course, acquainted with the unnamed 'Undertaker' referred to in the proposal and also with the 'first Artist … in Europe' who was to engrave the dies for the proposed coinage. He did not doubt that these two men were 'truly in a condition to furnish Coin in a state of higher perfection than has ever yet been issued by any Nation.' Yet Jefferson's conclusion was unfavorable. … He feared, among other things, that Mitchell's plan would expose the U.S. coinage system to enemy interference in time of war, and therefore recommended that the United States establish its own mint with help from Mitchell's 'Undertaker' … . Congress did eventually resolve to establish a U.S. mint. But that was not until 1792, when Jefferson had decided to take personal charge of the project, leaving Boulton entirely out of the picture." Footnote: "Boulton responded belatedly to Jefferson's adverse report and plans then in place for an initial U.S. coinage, in a letter of November 5, 1792. 'I agree,' Boulton wrote, 'with Mr. Jefferson that the coinage of money is one of the attributes of sovereignty and ought to be done in every great State, but I have considered America as a newborn child that needed doddering strings before it could walk and my offer was to furnish them." Good Money, page 115.

    How American lawyers can continue to ignore the fact that Treasury-Direct coinage, not privately-owned central bank fiat currency, is the backbone of the U.S. monetary system is beyond me.

  • Paul Marks

    Notes were rare (both in the United States and Britain) up till the First World War – wealthy people dealt in them, but ordinary people were indeed mostly paid in coin (especially in Britain – where "the white fiver", i.e. the Five Pound note, was worth considerably more than an average week's wages).

    However, I fail to see why you are so obessessed witht eh Treasury minting coints – although, yes, the Congress does have the power to do that.

    The private mints that were banned in the 1850's were not fraudsters.

    RickDiMare – what makes you think that the U.S. Treasuary will AUTOMATICALLY produce a more honest coinage than private mints would?

    After all, since the early 1960s, the silver was largely taken out of American coinage – which is now just as much token money, as are the Federal Reserve Notes you attack.

    Of course most "money" (in terms of bank credit) is neither coins or notes – it is computer transactions (most of the bubble is electronic these days).

    "No Paul, you do not understand, I do not want coins to be gold or silver….."

    Fair enough – have steel ones (or whatever), but do not force people to accept them.

    Or do I have to explain to you what people like George Washington would have done to someone who tried to FORCE him to accept a debased coinage?

  • Paul Marks

    There is no "monopoly" of coinage – Congress MAY control coinage (under the powers granted by Article One Section Eight) just as it MAY run a post office and build post roads. It does not HAVE to do these things – if it does not wish to do so.

    As for monopoly I have yet to see any evidence presented that coins used in the United States were any worse before the monopoly was established in the 1850s.

    On the contrary – the quality of coinage used in the United States is much worse NOW (when there is a monopoly) with the coinage being utterly debased.

    Of course some people think a debased coinage is a good idea – because it expands the money supply. But then I do not see why such people oppose paper money, or oppose computer money. If "expanding the money supply" really is a good thing (if it really can produce wealth without effort – basically something for nothing) then printing notes (and "throwing them from helecopters") or just playing games with electronic means is the best way of expanding the money supply.

    • George Selgin

      It's important to recognize that the notion of "debasement" doesn't apply to token or fiduciary coins, which are the only coins in use today. Such coins are mere representatives of standard money. Today of course standard money is itself fiat money,so we have token coins passing as representatives of…paper (or Fed ledger entries).

  • Paul Marks

    What Dr Selgin says here is undoubtly true. Today the only link between what the "Dollar" or the "Pound" are what they used to be (a measure of a certain type of commodity)is the NAME (nothing else).

    Unless one believes in the power of magic words to produce spells (which I do not) one can only conclude that the only source of value in modern currency are threats of violence from the state.

    In this way a government can create a currency that is fiat (not really based on the "value of coins" or the value of anything – other than the value people put in not being dragged off to prison). Based simply on threat backed edicts – an edict being what a government "fiat" is. However, the memory of when (for example) a "Dollar" was actually worth something is useful to government (indeed the illusion that "Dollars" actually represented something, other than threats of violence, was kept up till 1971).

    But I fail to see how this could work with a private currency (a real one – not cheques or debit cards, etc, that refer to government "Dollars").

    Either a private currency (or currencies) would have to be a commodity that people actually wanted – or it would have to be based upon threats of violence (a fiat money). And it is hard to see people willingly accepting that sort of power in private hands (leaving aside talk about "the Fed is private" it is and it is not – in the weird modern way).

    Readers should remember that Dr Selgin has already explained that the late F.A. Hayek's idea of money from an "index" of commodities would be "nonredeemable". In short it would not be any commodity, let alone lots of commodities.

    If one went to have the note honored the authorities would simply declare that one did not know what "nonredeemable" meant (just as a coin can not, with formal correctness, be described as "debased" if it is not even supposed to be anything, other than a threat of violence).

    In short these notes would simply be fiat (edict – command – threat) money. They would just pretend to be something else.

    Thankfully the world was at least spared this fraud – although YES there is no fraud if the word "nonredeemable" is upon the note (it just means that all the talk of an "index of commodities" is just a load of smoke and mirrors).

    One way to understand the difference between a fraudulent monetary system and the modern one (which, I admit, is NOT fraudlent – if one is speaking with formal correctness) is as follows….

    In a fraudulent monetary system a person (be he banker or a government official) might say….

    "This document (or note) represents one 35th of ounce of gold – for every 35 of these documents you have, you have an ounce of gold".

    These words are either true, the banker (or government official) actually has the gold he says he has. Or they are false – the banker (or government official) is lying (guilty of fraud – at least as the ordinary person would understand it).


    If the man says "accept these documents (notes – or computer entries) as payment and produce them for me as taxes – or I will drag you off to jail and blow your f….. head off if you resist".

    Then the man is NOT guilty of fraud.

    In no way is fraud involved in this monetary system – that I fully admit.

    It is the ultimate victory of a certain faction of the German "Hisorical School" of economics – those among them who attributed the value of money to the authority of the state and nothing else.

    Such men rather despised the Grand Dukes, and Princes, and Kings and (although they dare not say it) the Emperors of the German Empire themselves – as such men were stuck in the past, they considered themselves really naughty if they debased the coinage a bit (on the sly). Whereas, so these "economists" thought, true rulers would declare that the state was all-in-all and produce money that was utterly worthless – apart from the moral worth of threats of violence (to such thinkers violence, and the threat of it, was the highest good – and the source of all true value).

    As is well known, Richard Ely (the founder of American Economic Association and intellecutal mentor of both "Teddy" Roosevelt and Woodrow Wilson) was a great admirer of the Historical School of "economics" – however he was open in his contempt for some aspects of the German Empire.

    Openly (not in a hidden way) Richard Ely had nothing but contempt for the aristocrats (with their outdated concepts of individual honor) and the old Kingdoms and Grand Dutchies and Free Cities (and on and on) of the silly half way house that was the German Empire set up in 1871 – and the centuries of old laws and customs and traditions (the very things the "Historical School" PRETENDED it liked – at least in public).

    True collectivism would have to come from below, to speak for "the people" as a whole – and do away with the absurd limitations of the past.

    In this way a new "American" indeed "modern" from of collectivism could be achieved – in which even such old concepts as "Christian love" could be redefined in a collectivist sense.

    To some people (such as those at the "Nation" magazine, whose politics then was just about the opposite of what it is today) this sounded somehow disturbing – and they thought that Richard Ely and his "Progressive" movement (then taking control of university after university) might be a threat to freedom.

    But only because such "old women" (such as Mrs Stanford of Stanford university – who caused such problems for the Progressives till her oddly convenient death) clung to outdated views of what freedom was – and undoubted notions about the economy and relgion (and so on).

    The Progressive was not an "enemy of the Republic" – he (or she) simply wanted a new Republic. One of blood and steel, in which the spiritually out of date would be committed to a purifying fire. Here the people would have new hearts, new minds (as "unlike their fathers as possible" as Woodrow Wilson put it), a new spirit.

    Well – a long way from economics.

    But a new economics was only part of the vision. What was wanted (by Ricard Ely and co) was a "new humanity" fundementally different from the reactionary humans who had previously walked the Earth.

    Such a new race would not be "evil" – certanly not.

    These creatures would have a new (and vastly superior) understanding of what "good" is (I believe that Richard Ely is still honored in the Episcopalian Church for his work transforming such things as old, outdated, theology – with its individualist obsessions).

    Even many Progressives did not fully understand.

    For example the La Follette (strong Progessives) never understood how war (indeed violence generally) could be a positive good thing in-its-self (clinging the old idea that violence is only something one should undertake in genuine self defence or in the defence of the helples themselves under violent attack). As the first La Follette (politically speaking) had been assiciate of Richard Ely himself his failure to understand was enraging for Dr Ely – thus making him a natural target for attack (along with pasters who said prayers in the enemy language with dying old ladies – and other unacceptable people).

    Plenty of work for the three minute hate men to do (George Orwell was to rename such things "four minute" hate events in his "1984").

    Only "reactionary" wars (for example against "Progressive" Repubics under the control of "the People") were wrong. Wars that could be used for "Progressive" purposes (especially at home) were good – and they were good in themselves (as long as they undermined resistance to a collective spirit).

    Also the La Follettes (father and son) had an irritating habit of using ordinary language, for example openly speaking of the government control of this or that.

    For many intellectuals this missed the vital point of getting business elites on board with the project (as well as the vital need to use DECEPTION – although Progressive the La Follettes had a reacationary problem with telling lies).

    For example, how better to gain total control of money than to win over the bankers first?

    One does not tell them they are just tools.

    On the contrary – one lets the bankers think that they (as tough, cynical men) are you using you (the weak intellectuals) when (in reality) it is the other way round.

    After all, if they need to be, the bankers can always be used as a scapegoat for any bad thing that happens.

    The public will be so busy being filled with rage about "bankers", "corporations" and "the rich" that they will never see what is really being done (and some of the rich will even help things along – by denouncing the rest, in whatever terms are written for them).

    Indeed public rage with "rich bankers" can be used to produce even more government (sorry "people's") control of the financial system – even though the bankers supported the first steps themselves (for their own greedy motives).

    So the plan is going wonderfully.

    Both in the United States and around the world the Progressive dream getts closer by the day.

    Of course some people (and I rather suspect that Dr Selgin is one of them) have rather large doubts about the Progressive dream of total collectivism (although total collectivism under the control of an educated elite), on ground of economics (and, perhaps, other grounds).

    But it is hard to see what can be done to stop it.