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Larry White has three recent working papers

"Free Banking in History and Theory"

"The Troubling Suppression of Competition from Alternative Monies: The Cases of the Liberty Dollar and E-Gold"

"The Merits and Feasibility of Returning to a Commodity Standard"

And why the heck do I have to be the one to post about them? Come on, fellow bloggers, if you write a relevant paper, spare the two minutes to post a notice of it yourselves.

  • Paul Marks

    I make my standard point about a "standard". Either the commodity should be the money or it should not be the money.

    Calling a commodity (gold, silver – whatever) a "standard" for something else that is the money, leads to confusion (and opens the door to fraud).

  • Kurt Schuler

    Consider a case where the unit of account is gold but people actually use bank notes plus (not necessarily full-bodied) silver and copper coins to make hand to hand payments. Gold is used only to settle interbank clearings. Is gold "the money"? It is not in the sense of being a widely used means of payment among the public: silver and even copper eclipse it. Gold is the standard in spite of not being the money, though, because it is the unit of account and the medium of final settlement of payments.

  • Paul Marks

    In these days of electronic transfers of ownership why bother with notes? Why not simply pay by card – with the ownership of the physical gold being transferred from the person buying the goods or services to the person selling the goods or services.

    Of course the notes were supposed to represent the gold – but we both know that even the Bank of England (historically one of the LESS criminal Central Banks) actually issued more notes than it had physical gold (right from 1694). And commercial banks (protected by corrupt government courts – with their "suspension of cash payments" and so on) were actually worse than the Bank of England.

    Still, to answer your question directly, if the contract says gold (as many American contracts said till 1933 – when the incoming regime destroyed much of the Constitution of the United States, including the sanctity of contracts) then the notes are NOT money (because they are not what the private contracts specify), the notes are IOUs – and IOUs are not money, IOUs are IOUs.

    Obviously if the contacts had said "bits of paper with ink on them" (not a specific amount of gold of a specific purity) then the notes would indeed have been money.

  • Kurt Schuler

    Thank you: you have just unwittingly demonstrated why the standard is a necessary concept of analysis.

    • Paul Marks

      It may be a "necessary concept of analysis" but it is still a very bad idea – a "standard" causes general confusion and is a open door to fraud.

      Many things may be useful as concepts of analysis but are not suitable for the real world. For example the whole neo classical concept of "perfect competition" – such a concept may be useful for mathematical (or other) analysis, but it is utterly useless as a description of how the world it or should be.

      The effort to take the theoretical concept of "perfect competition" and make the real world conform to it, leads to "anti trust laws", "competition policy" and other such absurdity.

      In reality some producers produce more efficiently than others (their costs are not the same), and so on.

      As or money……

      If a contract says bits of paper with ink on them = fine, I would certainly not forbid it.

      But if the contract says certain amount of a commodity (of a certain purity) then that is what should be paid.

      The problem starts when people start confusing (either by accident – or because of conspiracy-to-defraud) bits of paper with ink on them, for the actual commodity.

      The London gold market is dominated by such confusions.

      And in the case of the London gold market it is not accidental – it is indeed conspiracy-to-defraud.

      The central problem with such fraudulent markets is that when one "calls the cops" (i.e. calls in the government) one finds that the authorities have actually been encroaching the various corrupt practices every-step-of-the-way.

  • Kurt Schuler

    I've written a number of books on monetary matters that use the concept of the standard. Tell me when you write one that does not use the concept and I will mention it in a post.

    • Paul Marks

      Kurt please try to learn that sneering at people "tell me when you write one" is not nice.

      Also you continue to misunderstand what I have said. I have no objection to you writing books (or articles) that use the concept of the "standard" (or "perfect competition" or any other concept) as a way of examining things – my objection is trying to use such a thing in real life.

      As I have said the "standard" idea causes confusion (which is the money – the commodity or the bits of paper claiming to represent the commodity?) and opens the door for fraud (people issuing notes, for example, with "one ounce of silver" written upon them – who DO NOT ACTUALLY HAVE THE SILVER).

      I repeat that historically governments have encouraged such frauds every-step-of-the-way. As part of the general government desire to get "lower interest rates" "cheap money", "expand demand", "stimulate the economy" and so on.

      For example…..

      If silver is money and there are one hundred million ounces of silver available – then the total amount of money is one hundred million ounces of silver (not one hundred million ounces and one – let alone one thousand million, or ten thousand million, and so on).

      The use of the concept of "standard" as an way of stimulating thought may be fine – but in practice it causes confusion and opens the door to fraud (see above).

      An obvious example is the great "deflation" after 1929 – the one that Milton Friedman (and others) was so upset about.

      No gold was destroyed during this "deflation" – so (as gold was money) there, logically, should have been no great "deflation" – and yet there was…….

      What had happened?

      What has happened was the massive expansion of the credit bubble, the "broad money", of the late 1920s – encouraged by Benjamin Strong of the New York Federal Reserve.

      The artificial prosperity of a monetary expansion "boom" is just that – artificial. Eventually reality strikes back – and the "boom" turns to "bust". As the credit bubble (the "broad money") shrinks back down towards the "monetary base".

      There is only one good way of "ending busts" – and that is to not to create the credit-bubble ("broad money") "boom" in the first place.

      Over the last several years Central Banks (which this site is supposed to be AGAINST) have been busy propping up commercial banks (by expanding the fiat money monetary base – in order to prop up the credit bubble of the bankers the credit bubble that the Central Banks, and the governments behind them, encouraged the bankers to create in the first place).

      If this site really was in favour of "free banking" (as you claim to be). You would support the closing down of the Central Banks and allowing the commercial banks (and other such) that depend on the drip feed of Corporate Welfare from them, to go bankrupt.

      Really go bankrupt – i.e. close-their-doors.

      Eventually this "collapse of the financial system" will happen anyway – reality can not be cheated for ever.

  • Kurt Schuler

    Apparently I did not communicate my point well enough. I did not mean to imply a sneer, only that the proof of the pudding is in the eating. If you want to have monetary theory without the use of the concept of the monetary standard, you need to offer a thoroughly worked out example. Only a book will really do, given that the concept has been a much used and much discussed part of monetary theory at least since the 19th century. A blog post is certainly too short to make the case, and even a long article is likely not long enough. You need not write the book yourself if you can find somebody else who has written such a book. Can you? On the other side, in addition to the many books and articles that use the concept of a monetary standard, there is a whole book focusing on it, Will E. Mason's Clarification of the Monetary Standard (which I have not read in many years).

    • Paul Marks

      My apologies – I thought that you were making the philosophical mistake known as the "argument from authority", I now see that I was wrong.

      As for books – I think one first needs to get the basic (logical) principles correct, before one expands to a book.

      I do not think that detailed research is the way to get to the basic principles (I believe they have to come first).

      But that would lead us to the deductive versus inductive debate.

  • RE: "The Troubling Suppression of Competition from Alternative Monies: The Cases of the Liberty Dollar and E-Gold"

    Does anyone know if the US Dollar or US Treasury has been employed, to any significant extent, by individuals or organizations involved in illegal or equally nefarious activities?