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Rothbard on Recessions
I was reading through some of the Bernank's old papers, and my eyes started to bleed. Presumably those of you who frequent ZH are experiencing the same thing as the never ending recession has brought out more than its share of insane keynesian commentary.
Here is a bit of sanity for everyone on this Sunday afternoon - Rothbard on Recessions
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when you put dogma over dialectics; aka debate and the acceptance that you as individual are not the fount of all knowlegde; that those who have differing views to you could also be part of the solution; that monolithic value prisms and straight and narrow ideology is dangerous for humans who by defintion have limited knowledge and experience; then you become a man whose life is a quest and whose insatiable curiosity, source of his odyssey, is fed on doubt, a state of mind that advances by trial and error. Not on inbred prejudice and blind faith, value systems based on revelatory beliefs imparted by others.
The worst prison for man is to believe that ideology, theoretical principles, are more important than primacy of empirical fact.
That is the legacy of Arsitotle, nobody has found a secular methodology more true than his logic.
Murray Rothbard and Adam Smith and all those luminaries notwithstanding, practioners of an approximate and social science called economics, cannot refute that principle of society.
To come back to empirical example : Pure invisible hand of economics as practised by oligarchy capitalism got us into this mess in 1929; NOT KEYNESIAN solutions that came afterwards. And its a repeat in the 1980-2008 period.
Keynes has ONLY become a la mode with those same oligarchy shills who created the problem; aka the squid/JPM cabal, since TARP and what followed. The oligarchy poachers now became mad Keynesian game keepers of statism manipulated by them.
Might I remind you that in the interim period of 1971-1980 Friedmanian logic fanned the fiat petrodollar inflation spiral and Keynes had already been classified as deja vu. So surprise, surprise, when he becomes anew a subject of reference under Ben and consorts...its an about turn that should have made Ayn Randian Greenspan cower in his doghouse of Zirpian, deregulated oligarchy construct. "I have been betrayed!"...
This HYPER keynesianism, POST CRISIS, is not what Keynes imagined in his days. So in itself your mouth frothing is a misplaced MISNOMER. Its supply side, capitalist , oligarchy madness now entering a new phase of lawless economics.
Don't shoot the messenger of facts; have the decency of mind to acknowledge in the light of this betrayal of society and civilized norms that private enterprise as PRACTICED, is not the panacea, far from it; its the problem today.
Are you actually asserting that following the kind of policies Friedman pushed for caused the inflation of the 70s and early 80s, or am I totally misinterpreting you?
Although I do agree with you regarding dogma, I just think you're completely wrong as to your interpretations of the empirical evidence. I also think you have no clue what Friedman's viewpoint even was.
Even Libertarians believe in a rule of law and the role of government in enforcing those laws.
How about we just start by enforcing the rule of law currently on the books?
9 months vs 9 years. Far more pain from trying to avoid the pain.
At least with Keynesianism, you can point to periods of time when it worked (and Keynes is the only economist ever who was an outstanding investment manager with a track record to prove it).
With Austrian School, we are more in the area of religion, faith-based economics, because it's all theory and has never been tried.
I have no trouble identifying emergencies that government made better. Try polio epidemics or hurricanes. The free market is helpless and mute when it comes to the big stuff that matters.
Keynes was a Beaucrat his entire life.
If the purpose of any economic system is obtaining true price then Keynes was only partially successful. Worse, the more "Kenysian" (state intervention) a nation becomes, the more difficult the task of obtaining true value as price is more and more determined by political instead of market forces. Our markets serve as a prime example. One of the prime reasons for the failure of the Soviet state was its inability for decades to determine the true cost of any product.
What periods of time did Keynesianism work? The US grew twice as fast when the government wasn't intervening, prior to 1913 When did Keynes manage other peoples' investments, instead of just shorting currencies he knew were grossly overvalued after the Treaty of Versailles.? Austrian economics has worked great for Hong Kong, Singapore, and any other countries over the last several thousand years that decided to keep the government out of economic "planning."Your whole post is fictional.
I hope you didn't fall off the front of the turnip truck.
the austrian school is realeconomics. it is an explanation what is actually happening. keynes actually had some very good ideas but they have been misinterpreted by useful idiots to justify the growth of the state for the benefit of a few at the expense of the rest of us. the austrian school is what reigned during the 1800s until 1921 in the usa simply as a function of very little .gov interference. while it could(and has been) be described as messy, that period marked the greatest economic growth period for the world with very stable prices only affected by real market forces. the fed ended the era of stable prices and roosevelt(with the initiation by his cousin teddy earlier) ended the era of a hands off .gov. the result is the mess we have today that can only be fixed with a massive, worldwide reset.
http://en.wikipedia.org/wiki/Warren_G._Harding died in office, succeeded by his VP Calvin Coolidge..."and off to the races the stock market and economy went." easily the biggest growth boom in US history since there was little Federal Government at the time. 1983--"time to justify the slaying of the inflation dragon by Paul Volker." Obviously we had a MASSIVE Federal Complex then so to talk in terms of Harding was patently ridiculous insofar as history goes. Not so much "the need for No Government right now cuz the PC/wireless revolution is about to hit Wall Street and the media" and "this is all ours." IBM in the 80's (largest company in the world then) was just a "shot over the bow" of what was about to come. An entire "information Age" was about to be unleashed. Amazing. To which i say http://www.youtube.com/watch?v=QIHLezCyzCI
"Bankers Trust" is now called "Deutche Bank" in case any of y'all are wondering.
To sum up:
There's nothing that ever goes wrong that politicians can't make worse.
The government, pols and crats, always accomplish the opposite of the STATED goal. Always!
That is because the stated goal is propaganda and the real goal is money and power. No exceptions.
I tell my kids that even if a pol or crat tells you the sky is blue they have somehow found an angle to monetize that fact.
Just like Gore monetizing the fact that the earth is warmed by the sun and temperatures vary.
hujel
Or as a corrolary, there is nothing that ever goes right where they can't intervene... sanity is in short supply these days...
Rothbard rocked.
.
Rothbard sucked and made libertarians look stupid with his whole "anarcho capitalism". Also the whole idea he pushed that fractional reserve banking is automatically fraud is patently absurd. Look at Canada up until 1940s or so. They had no central bank, but they OH NOES... had fractional reserve banking, and they did just fine.
Free banking is the answer, not forced 100% reserve banking by law. As long as the bank isn't telling you they keep 100% reserves and don't, then there is no fraud. Also the fact that Rothbard actually believed that somehow under "anarcho capitalism", no one would be doing fractonal reserve is just exceptionally absurd as that is what the market demanded multiple times in history.
http://www.freebanking.org/2012/07/13/more-dumb-anti-fractional-reserve-...
http://www.freebanking.org/2012/07/10/100-percent-censorship/
http://www.youtube.com/watch?v=JeIljifA8Ls&feature=player_detailpage#t=917s
Pushing people to Rothbard is great for hurting libertarianism with all of the stupid stuff he's said and written. I think the #1 thing that turned off educated people to Ron Paul who I otherwise adore is that he actually thinks "fractional reserve banking" is the issue, when it's just central banking that's the issue, not fractional reserve.
He's right about a lot of stuff, but only because he was great at ripping off other libertarian thinkers. Anything he thought up himself though was pretty much trash.
You're much better off trying to get people to read Milton Friedman or Hayek. Fuck Rothbard. I still feel like an idiot for parroting a lot of stupid ass Rothbard stuff until I realized how wrong it was and how little Rothbard had thought through some of his positions.
Edit: Also, the person who downvoted my comment, want to make a rebuttal? Or you just going to click the down arrow like a little coward who can't defend his own position?
Free Banking and/or a Competitive Note Issue IS the answer. Quite right, damage. Thanks for offering and defending the notion. Fractional Reserve Banking is not the source of our problems, nor is a fiat gold standard the source of their solution.
I see. Because Rothbard was a 100% reservist everthing else he said is total bullshit and that he "sucked" and is an "idiot". What are you, 5 years old?
I don't agree with 100% reserves, either, but the way in which people like you express themselves is what turns people off to libertarianism. You are obviously incapable of discussing any issue civilly. You, sir, are the embarrassment to libertarianism, not Rothbard. It is possible to disagree with Rothbard and not be an asshole about it.
I do not think Rothbard is an idiot in the conventional sense at all. A moral idiot though for sure. He intentionally mislead his readers as far as I'm concerned. It's especially hard to catch most of them because he knows his history so well he can fudge and lie with hardly anyone being able to call him out on it.
@damage
"...Also, the person who downvoted my comment, want to make a rebuttal? Or you just going to click the down arrow like a little coward who can't defend his own position?..."
Ur Gay.
Damage,
Sorry but you are as deluded as you claim Rothbard is if you think that educated people were turned off of RP due to "fractional banking". Ignoring the fact that not one in 50 Americans could even define the term, Paul's views on this were rarely more than a passing reference to the illogicalness of the idea. Rothbard did his mea culpa for the zanty anarcho-capitalism - something that wouldn't work anyway because the vat majority of Americans cannot conceive of an existence without an all=powerful nanny state.
It turned off many educated people with libertarian leanings that I knew who understood how the banking system worked.
I understand the banking system just fine. I doubt they want to give up something they benefit at on the expense of others. You appear to know very little about Rothbard for all of your criticism of him. I find this more and more common with critics of his these days.
None of them worked for banks. If I know so little about Rothbard, and you so much, then explain to me where I'm wrong. The fact you haven't even tried other than making blanket statements doesn't exactly work in your favor.
I'm not the one that is trying to convince everyone that Rothbard was wrong, you are. So you should think about that attitude and who is actually working to garner favor here. Here's a clue, it isn't me.
I'm still waiting for you to form an actual rebuttal other than hollow rhetoric, blanket statements and attacks on me personally.
You're a retard, and I already rebuttled below. It doesn't make you less of a retard though.
Alos, greening yourself is pretty low.
You have presented absolutely nothing to back your claim that he is wrong. Now you've just resorted to ad hominem attacks, which just reinforces you have nothing.
If I'm a retard then explain to me why and stop trying to distract.
Agreed.
Dig deeper and the evidence become clearer.
http://geolib.com/essays/sullivan.dan/royallib.html
https://libertyrevival.wordpress.com/2010/02/02/the-libertarian-conspiracy/
https://sites.google.com/site/justindkeith/home/geolibertarian-faq
This is interesting... but it seems a bit too on the conspiratorial side for my tastes.
However, I think I am liking what I've skimmed over so far regarding "geolibertarianism". The whole land issue is where Rothbard's arguments regarding anarcho-capitalism really break down in my opinion. I mean, if you followed his view would we not have to give up all our homes to whatever few native americans are left? So then 99% of the land would be owned by like 0.00001% of the population?
Also I'm finding this property tax to actually be less vile than the income tax and any sort of consumption tax. I can't tell you how much I rage whenever I have to pay sales tax and it makes me question if it is really any better than an income tax.
Edit: I should say land value tax, not "property tax".
Edit: not so entirely sure on the agrarian shit though... still mulling this LVT over in my head.
You clearly have no idea what Rothbard was saying. I doubt you actually read any of his work from the criticisms you have psoted here.
Your posts are all over the place, it's hard to address any one thing when you have no real cohesive logical point being made.
You keep saying that but I've not once seen you explain how I'm misunderstanding him.
My posts regarding Rothbard's view on fractional reserve banking have all had a common theme. What are you talking about?
How about you address just one of them then, hmm?
Read above.
Where? Quote it for me.
Down arrow because your a dickhead. Now go away.
Is that your counter-argument?
Also, I believe you meant "you're", not "your". As in, "You are a dickhead".
I think damaged needs a time out and a potty break.
You don't understand Rothbard, and from your comments I am lead to believe you do not have the intellect to understand him. Rothbard did not say fractional reserve banking should be prohibited by law, he said it was fraud when a bank offered to hold money as a demand deposit and then lent it out, only keeping a fraction in reserve. If the customers know this is going on and are ok with it, then fine; but if banks mislead their customers and they come in for their money and it's not there, the customers can sue for their money, the bank goes bankrupt and must be liquidated, and the officers of the bank can be prosecuted for fraud, by their victims in a voluntary funded (not state established) court.
In an anarcho-capitalist system, banks would offer two different services: demand deposits where the account holder would pay a fee for the service of the bank warehousing his money, and time deposits where the account holder would receive interest for allowing the bank to loan out his money for a set period of time. Fraud only comes into the picture when the bank tells you you have a demand deposit, but in fact lends that money out.
The fact that fractional reserve banks got away with fraud for a set period of time, either because the deposit holders did not come for their money or the state allowed them to suspend specie payments for a time while they got their affairs in order, says nothing about the validity of f-r banking. It is still fraud because it is misleading the customers about what is going on with their money. They believe it is in the bank when in fact it has been lent out. When you intentionally mislead your customers, it is fraud regardless of whether or not they catch you in the act.
The most important thing about banking in a free society is not whether it is f-r or not, it is the fact that there is no state or central bank to bail out the banks if they become insolvent. If a bank begins lending out deposits that were intended to be demand deposits (engages in f-r banking) and gets caught, the officers of the bank are guilty not of "fractional reserve banking" but of simple fraud. Distinguishing between f-r banking and all other forms of fraud is pointless. If you are holding another persons money and you do something with that money that the owner does not approve of, you are guilty of fraud regardless of what exactly you did.
You obviously completely ignored my below comment.
It is not I who doesn't understand Rothbard, it is you who doesn't understand how banking systems work.
Also I find it hilarious you think you can be so sure to predict what the market would create during modern times if we had zero banking regulation and no central bank. If you think you can you're just as guilty of the same sort of stuff you attack central bankers for. I'm at least using historical precedent.
http://www.freebanking.org/2012/07/13/more-dumb-anti-fractional-reserve-... <-- I've already quoted this below... if you have some sort of rebuttal against it, please explain. To sum it up, without a central bank there is no "thin air" lending. The "thin air" lending is completely a side effect of the central bank.
http://www.freebanking.org/2012/07/17/banknotes-are-not-and-have-never-p... <-- "Fraud" LOL
Also had you actually read the argument I quoted below you would understand they would not be able to get away with the sort of thing you think they would be able to because they would have a massive clearing debt that would asspound them in a competitive market within DAYS.
I'll quote it one more time since you obviously must be blind:
That example only works if the environment is static. Banks take in many deposits, makes many loans, money isn't static- it pools and flows. Unless it is suddenly demanded, banks can maximize its' positions to create greater amounts of credit. Further, the example makes an assumption of a set reserve that is generous by today's banking standards. It fails to consider derivatives and investment banking.
If the money isn't there, it is fraud. Perhaps you should ask the Cypriots.
Fractional reserve lending is the oldest trick in the book, it implies that bankers are honest and would never push the envelope, so to speak. Of course, FR banking could be sucessfully managed, it just never has been. Even with a gold standard and specie redemption, banks abused their reserves and created currency they couldn't redeem.
I would fail your professor, for his ignorance of economic history. He also fails to examine the effects of manipulation within markets, leverage and fractional reserve lending. We haven't even begun with the use of overvalued assets as credit for capital requirements.
Sometimes, you have to get out of the classroom. As long as you put your wealth in the hands of someone else to manage and protect it, you are creating risk. Fractional reserve banking ups the risk, especially when banks no longer fear risk because of bailouts. Why do banks own politicians? So they can suspend payments and bank runs. The reserve is meaningless, if the loans create unexceptable risk (MBS anyone?).
You're making a whole lot of assumptions and you're more or less beating a strawman. Almost nothing about Cyprus relates at all to the points I was making regarding "free banking" systems.
It's especially hilarious you think George Selgin is my professor when I've never even been to college except to brush up on some math I felt I missed out on in high school. Oh, and when I was visiting friends who went to college, etc.
It was very well successfully managed in Canada pre 1935. So the above statement is demonstratably false.
You're making blanket statements here with no evidence to back it up. Selgin explained his issue with Rothbard's position, you have not explained why Selgin is wrong. You've only made blanket statements and you also obviously completely missed his point if you're talking about leverage at this point. The central bank is what allows the insane leverage. If we had no central bank any bank attempting such crazy leverage would be crushed overnight, or is your reading comprehension really lacking that much?
Any fractional reserve system provides leverage. It is the function of creating non-existent value on the hope it will be returned with interest. This is where you completely miss the boat. You're dealing in ideals. Did you think that Canada was the first place where a semi-responsible system of fractional reserve banking functioned?
Free banking, State banking, Central banking all have their success stories. In the US, it was in New England, where banks did quite well while other banks suffered. This was because of risk management. In Canada, large banks functioned as lenders of last resort, just lke a central bank. Often, if the problems were large enough, they pooled their resources to protect the system. If you would have read my citation below, you would know this.
As long as you fail to consider that fractional reserve money creation must compensate for the cost of interest, which is dependent on profitable production of goods and services above and beyond the value of the original loan amounts, you are talking out your ass.
Further, it is completely unnecessary. Unless the saver is advised and willing to place their savings at the command of the bank, the risk, coupled with human nature and human error will result in shortfalls, unless the bank is incredibly disciplined. In an inflationary environment (growth environment), there are guaranteed to be failures and without a system to protect the savers, there funds will be lost. Fractional reserve lending increases the chances of this failure.
As for support, you have continued to provide absolutely ZERO for your positions. You want to point to a single argument, because you understand nothing outside of it. You complain you are not understood, when it is your own misunderstanding and ignorance of the broader science that impedes your ability to grasp what so many are telling you.
You should probably actually read some Rothbard, because he covered you criticisms more than once.
Then quote him. I'm waiting...
I've read plenty of Rothbard and I blame him for poisoning my mind with bullshit.
Yeah, you're obvious a demagogue. This will be my only reply to you:
If you are incapable of rationlizing through Rothbard and understanding what he is saying, then the fault is only your own. He is ammazingly easy to read and understand, and all of your points that you brought up were addressed in his various works. You however remain contend to try and force others to prove you wrong, when it's obvious to us that have read his material that you haven't actually read Rothbard, and if you did you did not really comprehend what he was saying.
Since you want to try and be an abusive asshole rather than being honest and respectful to others, fuck off...
Since he's so "ammazingly" easy to read then quote him and explain where I'm wrong.
If I'm a demagogue then what are you? Hahaha.
HAHAHAHA I'm apparently more intelligent than you because I caught onto what Rothbard was saying well before Selgin and you. Gah, he's a Ph.D. and he still didn't understand Rothbard.