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Creativity and crackpots

Isaac Asimov wrote an essay on creativity in 1959 that was only published recently.  His view is that “the person who is most likely to get new ideas is a person of good background in the field of interest and one who is unconventional in his habits. (To be a crackpot is not, however, enough in itself.)”

Monetary theory and policy have been fertile ground for crackpots (more commonly referred to as “monetary cranks”) from the beginning. Part of the attraction is that the field has some abstruse aspects. Another is that there is the appeal of seemingly getting something for nothing with the right policy, or, contrarily, the suspicion of being swindled by the powers that be.

Far be it from me to issue a blanket condemnation of monetary cranks, though. Some deserve the appellation “interesting fringe thinkers.” Though almost always wrong on the theory, sometimes they have been right on the policy when conventional opinion has been dead wrong! During deflations, schemes such as Silvio Gesell’s proposal for a currency that depreciates if not spent (which interested Keynes and Irving Fisher) offer workarounds for overly tight monetary policy and the consequent fall in velocity. During high inflations, pure gold or barter schemes offer workarounds for overly loose monetary policy.

(Scott Sumner has a recent post somewhat related to these ideas. On a point of personal privilege, though, he should know enough not to refer to Argentina’s monetary system of the 1990s as a currency board. Argentines called it the “convertibility” system. It was a quasi-currency board, with some but not all features of an orthodox currency board, and the distinction is important both in theory and in practice. Few people have looked at the evidence, but Scott should be one of them.)