WEBVTT NOTE Destructive Myths About Money, Interest Rates and Business Cycles 1 00:00:00.000 --> 00:00:06.000 Given the time limits, I'm only going to talk about two destructive myths, but they're extremely dangerous and destructive, 2 00:00:06.000 --> 00:00:11.000 and they currently guide Federal Reserve policy. 3 00:00:11.000 --> 00:00:19.000 The relationship among money, interest rates and business cycles is and has been for centuries the subject of countless myths. 4 00:00:19.000 --> 00:00:28.000 So pervasive had these myths become that eventually a special term, monetary cranks, was invented to designate their fabricators. 5 00:00:28.000 --> 00:00:35.040 Despite the fact that these dangerous myths had been refuted time and again by economists beginning in the 18th century, 6 00:00:35.040 --> 00:00:42.040 many have persisted to our day while new ones continue to crop up and take root at a dizzying pace. 7 00:00:42.040 --> 00:00:51.760 The persistence of the mythology of money in the contemporary world is mainly attributable to the fact that it serves the purpose of governments 8 00:00:51.760 --> 00:01:00.280 because it obscures from their citizens the destructive effects of the absolute monopoly of the money supply possessed by their central banks. 9 00:01:00.280 --> 00:01:08.560 Since World War II, the economics profession, which like paper fiat money is also largely a creation of government intervention, 10 00:01:08.560 --> 00:01:15.680 has been complicitous in formulating and disseminating myths about money to the public. 11 00:01:15.680 --> 00:01:22.740 Thus, monetary crankism eventually gained academic respectability under the name of macroeconomics, 12 00:01:22.740 --> 00:01:29.280 whose modern practitioners have refined, systematized and added to the body of monetary myths. 13 00:01:29.280 --> 00:01:37.880 The most prolific and persuasive fabricator of monetary myths in the 20th century was John Maynard Keynes. 14 00:01:37.880 --> 00:01:41.740 Not coincidentally, Keynes is the acknowledged founder of macroeconomics, 15 00:01:41.740 --> 00:01:46.940 and his major work was entitled The General Theory of Money, Interest and Employment. 16 00:01:46.940 --> 00:01:51.060 The absence of the word prices in the title is significant, 17 00:01:51.060 --> 00:01:55.620 as is the absence of any discussion of the function of the price system in the text. 18 00:01:55.620 --> 00:01:59.620 For as Murray Rothbard pointed out, the hallmark, and I'm quoting Murray Rothbard, 19 00:01:59.620 --> 00:02:04.500 the hallmark of crackpot economics is an analysis that somehow leaves out prices 20 00:02:04.500 --> 00:02:10.580 and talks only about such aggregates as income, spending and unemployment." 21 00:02:10.580 --> 00:02:15.700 It is therefore no surprise or accident that Keynes included a chapter in the general theory 22 00:02:15.700 --> 00:02:21.540 in which he explicitly praised the crackpot ideas on money, interest and depression 23 00:02:21.540 --> 00:02:27.860 put forth over the ages by mercantilists, medieval supporters of usury laws against interest, 24 00:02:27.860 --> 00:02:35.620 underconsumption theorists and above all assorted monetary cranks of the late 19th and early 20th century. 25 00:02:35.620 --> 00:02:40.820 One of the latter was named Silvio Jessel, who had proposed stamped money 26 00:02:40.820 --> 00:02:45.380 that would automatically lose a fixed percentage of its value every month, 27 00:02:45.380 --> 00:02:50.420 unless its holder paid the government a tax for a monthly stamp on each note. 28 00:02:50.420 --> 00:02:56.100 This scheme, Jessel believed, would encourage people to treat money like rotting vegetables 29 00:02:56.100 --> 00:03:00.340 and try to get rid of it by spending it quickly rather than saving it. 30 00:03:00.340 --> 00:03:06.140 Keynes anointed Jessel as a, quote, strange unduly neglected prophet, unquote. 31 00:03:06.140 --> 00:03:15.060 The great American economic journalist, Henry Hazlitt, referred to Keynes' exaltation of such ideas as the canonization of the cranks, unquote. 32 00:03:15.060 --> 00:03:21.380 Ludwig von Mises perceptively characterized the main idea of monetary crankism. 33 00:03:21.380 --> 00:03:29.420 Mises noted that most people unfamiliar with economic theory believe that credit expansion and an increase in the quantity of money in circulation 34 00:03:29.420 --> 00:03:37.820 are good means for lowering the rate of interest permanently below what height it would attain on a non-manipulated capital and loan market. 35 00:03:37.820 --> 00:03:40.420 Okay, and I was quoting Mises there. 36 00:03:40.420 --> 00:03:47.020 Monetary cranks seemingly go further, but Mises pointed out, 37 00:03:47.020 --> 00:03:49.820 they are only more consistent than other people are. 38 00:03:49.820 --> 00:03:55.120 They want to reduce the rate of interest to zero and thus abolish altogether the scarcity of capital. 39 00:03:55.120 --> 00:04:07.200 All the arguments advance in favor of the thesis that the rate of interest can be reduced by credit expansion from 5% or 4% to 3% or 2% are equally valid for reduction to zero. 40 00:04:07.200 --> 00:04:13.760 The monetary cranks are certainly right from the point of view of the monetary fallacies approved by popular opinion." 41 00:04:13.760 --> 00:04:21.040 So they're simply more consistent than people like Alan Greenspan that want to lower the rate to some neutral level. 42 00:04:21.040 --> 00:04:28.080 Regarding Keynes, Mises wrote, his teachings were even more contradictory than those of his predecessors who were dismissed as monetary cranks. 43 00:04:28.080 --> 00:04:36.400 He merely knew how to cloak the plea for inflation and credit expansion in the sophisticated terminology of mathematical economics. 44 00:04:36.400 --> 00:04:41.680 Mises' characterization of the basic idea of the monetary cranks, especially Keynes, 45 00:04:41.680 --> 00:04:47.720 is a good description of one of the main goals of the current research program of modern macroeconomics, 46 00:04:47.720 --> 00:04:52.280 which is to discover a formula for a so-called neutral interest rate. 47 00:04:52.280 --> 00:04:57.160 This magic formula will supposedly guide central banks in continually readjusting 48 00:04:57.160 --> 00:05:00.000 and fine-tuning the structure of interest rates 49 00:05:00.000 --> 00:05:02.440 to ensure a low inflation rate 50 00:05:02.440 --> 00:05:07.280 and a very low or natural rate of unemployment. 51 00:05:07.280 --> 00:05:13.000 Okay, now this type of monetary crankism is much more dangerous than the older kind 52 00:05:13.000 --> 00:05:18.520 because this type of monetary crankism, under the guise of modern macroeconomic theory, 53 00:05:18.520 --> 00:05:25.160 guides the policies of all central banks, okay? 54 00:05:25.160 --> 00:05:29.960 Okay, unfortunately, the academic myth-making seems to have been effective in misleading the public 55 00:05:29.960 --> 00:05:36.360 into supporting an unsound and exploitative monetary system based on monopoly central banks. 56 00:05:36.360 --> 00:05:42.040 It is thus imperative to relentlessly expose and refute the most dangerous monetary myths 57 00:05:42.040 --> 00:05:47.160 in order to alert the public to the destruction caused to their living standards and wealth 58 00:05:47.160 --> 00:05:55.560 and to the overall economy by the cycle of inflation, financial crisis and recession 59 00:05:55.560 --> 00:05:59.080 that inevitably results from the political monopoly of the money supply. 60 00:05:59.080 --> 00:06:02.520 Okay, so here are two of the most dangerous prevailing myths about money. 61 00:06:02.520 --> 00:06:07.640 One's old, one's new, and I'll give you a short analysis of why they are not true. 62 00:06:12.040 --> 00:06:24.040 The first myth, myth number one, is that low interest rates are necessary to stimulate investment, prevent recession and keep the economy growing. 63 00:06:24.040 --> 00:06:33.040 This is the ancient and undying myth that is at the heart of monetary crankism and modern macroeconomics. 64 00:06:33.040 --> 00:06:36.040 This is Paul Krugman economics. 65 00:06:36.040 --> 00:06:46.040 The intellectual case for this myth was clearly and definitively demolished by the Austrian theory of the business cycle, which was developed by Mises and Friedrich von Hayek in the early 20th century. 66 00:06:46.040 --> 00:06:53.040 And yet it remains entrenched in modern macroeconomics and drives the policies of all modern central banks. 67 00:06:53.040 --> 00:07:03.040 But why is this considered to be a myth? Is it not true that lower interest rates induce greater investment in the economy and therefore more rapid rate of economic growth? 68 00:07:03.040 --> 00:07:18.040 Is it not also true that the Fed and other central banks can permanently maintain interest rates at some low, neutral level that is consistent with a high rate of investment, full employment and rapid growth in the economy with a low rate of inflation? 69 00:07:18.040 --> 00:07:30.040 The answer to the latter two questions is a resounding no. These questions are based on fallacies that were long ago refuted by Mises, Hayek and other Austrian business cycle theorists. 70 00:07:30.040 --> 00:07:38.040 To begin with, and contrary to what macroeconomics from Keynes to Paul Krugman contend, a fall in interest rates does not cause an increase in investment. 71 00:07:38.040 --> 00:07:45.040 Rather, the basic or pure interest rate and the quantity of investment are together determined by people's time preferences, 72 00:07:45.040 --> 00:07:54.040 or the degree to which they prefer consumption goods in the present or near future to consumption goods of the same quantity and quality in the more remote future. 73 00:07:54.040 --> 00:07:56.040 All other things equal. 74 00:07:56.040 --> 00:08:06.040 When people's time preferences fall, the difference between the value they attach to a satisfaction in the present and to the same satisfaction in the future also falls. 75 00:08:06.040 --> 00:08:16.040 As a result, the proportion of income they spend on current consumption decreases, while the proportion of income they voluntarily save for the future increases. 76 00:08:16.040 --> 00:08:23.000 So, if someone faces the prospect of a child going to college with the accompanying huge expenses, 77 00:08:23.000 --> 00:08:26.840 as I have found out this year, their time preferences fall. 78 00:08:26.840 --> 00:08:33.640 They begin in advance to begin to save more for consumption that goes along with sending a child to college. 79 00:08:33.640 --> 00:08:40.200 And they cut back on what they spend on entertainment and so on at the present. 80 00:08:40.200 --> 00:08:45.400 In any case, this fall in the overall consumption saving ratio, an increase in voluntary savings 81 00:08:45.400 --> 00:08:52.400 to be allocated to future consumption results in more funds available for investment by business and a lower interest rate. 82 00:08:52.400 --> 00:09:02.400 Thus, the interest rate gauges the degree to which people prefer a means of satisfaction available today to an equal means of satisfaction available in the future. 83 00:09:02.400 --> 00:09:07.400 Let me make this very concrete. For instance, if the pure interest rate is 5% per year, 84 00:09:07.400 --> 00:09:16.800 It implies that, in general, people consider the sum of dollars available today to be five percent more valuable than the same sum available one year from now. 85 00:09:16.800 --> 00:09:21.720 Now, if people suddenly re-evaluate the difference in value between goods available at different times, 86 00:09:21.720 --> 00:09:31.240 because they're saving for their retirement, or to send their child to college, or to buy eventually, let's say, a boat, for any of these reasons, okay, 87 00:09:31.240 --> 00:09:34.520 once that happens they'll begin to save more, they'll begin to shift more of 88 00:09:34.520 --> 00:09:36.000 their income into the future 89 00:09:36.000 --> 00:09:40.200 to buy consumer goods in the future. This does not damage the economy 90 00:09:40.200 --> 00:09:45.160 it does not cut down on spending that send us into a recession. 91 00:09:45.160 --> 00:09:47.880 So let me reiterate then that the quantity of voluntary savings and 92 00:09:47.880 --> 00:09:48.540 investment 93 00:09:48.540 --> 00:09:51.640 and the pure interest rate are co-determined by people's 94 00:09:51.640 --> 00:09:55.460 subjective time preferences, how they feel about present 95 00:09:55.460 --> 00:09:59.880 versus future satisfaction. The interest rate is therefore a ratio of market 96 00:09:59.880 --> 00:10:02.880 Prices of Consumer Goods, which are separated in time. 97 00:10:02.880 --> 00:10:04.560 Now this brings us to the second question 98 00:10:04.560 --> 00:10:06.880 of whether the Fed is able to peg the interest rate 99 00:10:06.880 --> 00:10:11.080 at some allegedly optimum non-market level. 100 00:10:11.080 --> 00:10:13.000 The Fed can certainly peg an interest rate, 101 00:10:13.000 --> 00:10:15.880 such as the Fed funds rate, which it does today, 102 00:10:15.880 --> 00:10:19.520 which is the rate on overnight loans between banks, 103 00:10:19.520 --> 00:10:23.080 in the same way that a city council can peg rents 104 00:10:23.080 --> 00:10:25.160 or Congress can peg gasoline prices 105 00:10:25.160 --> 00:10:27.080 below their market clearing levels. 106 00:10:27.080 --> 00:10:29.800 In both cases, of course, both sound theory 107 00:10:29.800 --> 00:10:45.200 and Bitter Historical Experience teaches us that an attempt to politically manipulate market prices results in nullifying their rationing function, causing persistent shortages and causing the distortion of economic calculation. 108 00:10:45.200 --> 00:10:58.840 The artificially lowered prices of gasoline or rental housing lead entrepreneurs to misallocate resources to the production of lower valued goods in other industries despite severe shortages of the price control product. 109 00:10:58.840 --> 00:11:10.400 Likewise, when the Fed pegs an interest rate below the natural rate consistent with social time preferences and the availability of voluntary savings, it causes a similar distortion of economic calculation. 110 00:11:10.400 --> 00:11:28.640 The misallocation of scarce resources is much more pervasive than in the case of the pegging of a particular commodity price, however, because the interest rate is the ratio of all present and future commodity prices and figures into and falsifies profit calculations throughout the entire economy. 111 00:11:28.640 --> 00:11:35.520 The only means by which the Fed can control the Fed funds rate is by the continual injecting of new bank reserves into the economy. 112 00:11:35.520 --> 00:11:43.040 In lending out these new reserves, the fractional reserve banking system creates new money out of thin air in the form of checkable deposits. 113 00:11:43.040 --> 00:11:55.000 At the same time, in order to find borrowers for these newly created loanable funds, the banks lower the structure of interest rates on credit markets below the natural rate, which is consistent with voluntary savings. 114 00:11:55.000 --> 00:11:58.960 This expansion of bank credit and the money supply and the artificial lowering of interest 115 00:11:58.960 --> 00:12:03.840 rates stimulates an unsustainable investment boom, since most of the additional credit 116 00:12:03.840 --> 00:12:09.760 is borrowed by business. Eventually, when the interest rates rise, and they typically 117 00:12:09.760 --> 00:12:16.520 do, the crisis typically occurs when the Fed, facing accelerating inflation of consumer 118 00:12:16.520 --> 00:12:21.760 prices or perhaps an expanding real estate or financial bubble, brings the expansion 119 00:12:21.760 --> 00:12:26.240 of Credit to a Screeching Halt. In so doing, the Fed is forced to stop taking its short-run 120 00:12:26.240 --> 00:12:31.440 interest rate and finally release the interest rate to rise back towards the level dictated 121 00:12:31.440 --> 00:12:36.440 by people's choices about present and future consumption. 122 00:12:36.440 --> 00:12:40.000 As entrepreneurs recalculate their previous investment plans and projects with these higher 123 00:12:40.000 --> 00:12:44.560 interest rates, the malinvestments of the boom are revealed and liquidated and we have 124 00:12:44.560 --> 00:12:47.000 a depression. 125 00:12:47.000 --> 00:12:52.760 So to sum up that myth, low interest rates, contrary to the myth that low interest rates 126 00:12:52.760 --> 00:12:57.680 spur investment and economic growth, when the Fed attempts to depress interest rates 127 00:12:57.680 --> 00:13:02.560 and keep them low, thinking that it can increase the amount of investment in the economy, what 128 00:13:02.560 --> 00:13:09.760 it does is to act in defiance of what people really want in terms of present and future. 129 00:13:09.760 --> 00:13:15.840 And the additional investments that are undertaken based on this counterfeit credit eventually 130 00:13:15.840 --> 00:13:19.440 really squander scarce resources and lead to depression. 131 00:13:19.440 --> 00:13:21.440 Let me get to the second myth. 132 00:13:21.440 --> 00:13:25.020 The second myth is the new myth. 133 00:13:25.020 --> 00:13:28.040 It is no longer possible to meaningfully measure the money supply. 134 00:13:28.040 --> 00:13:33.700 Now, after the inflationary decade of the 1970s and early 1980s, it seemed that the 135 00:13:33.700 --> 00:13:38.240 economic profession, businessmen and investors, and even the public at large, were beginning 136 00:13:38.240 --> 00:13:41.080 to disabuse themselves of myth number one. 137 00:13:41.080 --> 00:13:44.380 They were beginning to understand that low interest rates were not the royal road to 138 00:13:44.380 --> 00:13:49.740 to Vigorous Growth, but the downward path to chronic inflationary recession. 139 00:13:49.740 --> 00:13:55.140 They were also beginning to dimly perceive that interest rates were really a market phenomenon 140 00:13:55.140 --> 00:13:59.580 beyond the control of central banks, which could only exercise control over the supply 141 00:13:59.580 --> 00:14:04.540 of paper money, which they monopolized. 142 00:14:04.540 --> 00:14:10.040 As evidence of this intellectual revolution, the peculiar kind of monetary crankism embodied 143 00:14:10.040 --> 00:14:15.560 and post-war Keynesian macroeconomics was in headlong retreat by the late 1970s, so 144 00:14:15.560 --> 00:14:17.920 Keynesian macroeconomics is falling apart. 145 00:14:17.920 --> 00:14:23.360 Unfortunately, in the late 1980s, a new myth gained currency that permitted a return to 146 00:14:23.360 --> 00:14:27.120 interest rate manipulation by the Fed that we still have today. 147 00:14:27.120 --> 00:14:33.560 Not surprisingly, the emergence of this myth coincided with the revival of Keynes' ideas 148 00:14:33.560 --> 00:14:38.800 and was disguised as a new brand of macroeconomics known as the new Keynesianism. 149 00:14:38.800 --> 00:14:45.040 The most prominent proponent of this myth was none other than the maestro of monetary 150 00:14:45.040 --> 00:14:48.480 cranks himself, Alan Greenspan. 151 00:14:48.480 --> 00:14:52.640 In the early 1990s, Greenspan revealed that for years the Fed had been unable to control 152 00:14:52.640 --> 00:14:55.920 or even accurately measure the money supply. 153 00:14:55.920 --> 00:14:59.600 Greenspan even maintained that the very notion that it was possible to measure and control 154 00:14:59.600 --> 00:15:02.200 money was, quote, outdated. 155 00:15:02.200 --> 00:15:08.780 Now instead of getting tossed out of his job on his ear for gross ineptitude or an advance 156 00:15:08.780 --> 00:15:15.780 for Greenspan's case of dementia, for if the Fed can count and control anything, it certainly can count and control the number of dollars it itself creates. 157 00:15:15.780 --> 00:15:24.780 Leading macroeconomists and financial pundits praised Greenspan's profound insight and honesty. 158 00:15:24.780 --> 00:15:30.780 Shortly thereafter, Greenspan announced that the Fed was going to give less weight to the monetary aggregate, 159 00:15:30.780 --> 00:15:34.780 so it weren't going to worry about how much the supply of money was increasing. 160 00:15:34.780 --> 00:15:44.780 And one prominent macroeconomic writer named Alan Greenspan, who had also worked as a Fed vice chairman, 161 00:15:44.780 --> 00:15:51.780 pointed out that Greenspan's remarks were greeted with yawns in both academia and the financial market because it was old news. 162 00:15:51.780 --> 00:15:57.780 Macroeconomics was also saying things like, or had already been saying that there would be no, 163 00:15:57.780 --> 00:16:01.780 that there is no possibility of measuring and controlling the money supply. 164 00:16:01.780 --> 00:16:08.660 Okay, now is that true, okay, that the money supply cannot be meaningfully controlled? 165 00:16:08.660 --> 00:16:10.340 What reasons they give that it could not be? 166 00:16:10.340 --> 00:16:13.180 And I only have a few minutes, so I will sum them up. 167 00:16:13.180 --> 00:16:18.340 Basically, there were a lot of financial innovations in the late 70s, early 1980s. 168 00:16:18.340 --> 00:16:23.300 We had the creation of many new financial assets like money market mutual funds, 169 00:16:23.300 --> 00:16:28.900 short-term certificates of deposits, sweep accounts, now accounts, okay, and so on. 170 00:16:28.900 --> 00:16:35.200 and supposedly now all of these things performed to some extent the different functions of money. 171 00:16:35.200 --> 00:16:40.600 So now we could never really tell anymore, it was said, what really was money in the economy. 172 00:16:40.600 --> 00:16:48.300 So the Fed now was producing four or five different measures of the money supply. 173 00:16:48.300 --> 00:16:56.800 This myth that the supply of dollars in the economy cannot be meaningfully quantified and compared over time, of course, does one thing. 174 00:16:56.800 --> 00:17:04.700 It stops outside observers from monitoring the Fed and figuring out whether and to what extent the Fed's policy is inflationary. 175 00:17:04.700 --> 00:17:12.360 It also gives the Fed a new scientific rationale for once again indulging in manipulating interest rates. 176 00:17:12.360 --> 00:17:15.860 Now, what's the Fed's incentive to manipulate interest rates? 177 00:17:15.860 --> 00:17:22.860 Well, the reason why the Fed pegs interest rates at artificially low levels is its eagerness to serve the interests of its political masters 178 00:17:22.860 --> 00:17:27.140 by monetizing their huge budget deficits to pay for their wars and so on 179 00:17:27.140 --> 00:17:32.620 and maintaining a cheap money policy that stimulates and subsidizes not the whole economy 180 00:17:32.620 --> 00:17:35.940 but interests sensitive sectors of the economy 181 00:17:35.940 --> 00:17:43.340 that typically comprise politically connected firms and unions like energy, steel, construction, auto and investment banking. 182 00:17:43.340 --> 00:17:50.020 I'm excusing myself, five minutes? Four minutes, thank you Mark. 183 00:17:50.020 --> 00:17:55.020 See, I can count on, like, Greenspan. I can add up fingers. 184 00:17:55.020 --> 00:17:57.020 Okay. 185 00:17:57.020 --> 00:18:02.020 Well, to make a long story short, Austrian economists show that this is all hokum. 186 00:18:02.020 --> 00:18:06.020 This is a total myth that the money supply cannot be measured. 187 00:18:06.020 --> 00:18:10.020 The money supply is stated in common units. Those common units are the dollar. 188 00:18:10.020 --> 00:18:17.020 Those dollars that exist in currency that you have in your purses and wallets can certainly be added together. 189 00:18:17.020 --> 00:18:19.020 That's known as currency. 190 00:18:19.020 --> 00:18:28.020 Also, those immediate claims to obtaining dollars that you own, which are your checking accounts and your savings accounts, also can be added together. 191 00:18:28.020 --> 00:18:33.020 They're also stated in terms of dollars. There is no mystery about adding up money. 192 00:18:33.020 --> 00:18:41.020 The other things that you own, things like money market mutual funds, certificates of deposit, corporate bonds and so on, 193 00:18:41.020 --> 00:18:45.020 they can help you economize on the amount of money you hold. 194 00:18:45.020 --> 00:18:52.020 The fact that you own money market mutual funds or corporate bonds that can easily be sold off and redeemed or sold for money. 195 00:18:52.020 --> 00:18:57.020 They allow you to economize and reduce your demand for money, but they're not part of the supply of money. 196 00:18:57.020 --> 00:19:02.020 Why? Because they have to be sold for money before you can use the money to spend. 197 00:19:02.020 --> 00:19:07.020 As Austrian economists point out, the money supply is simply the general medium of exchange. 198 00:19:07.020 --> 00:19:14.180 of Exchange. Anything that is acceptable in exchange or anything that you can redeem safely 199 00:19:14.180 --> 00:19:21.800 and immediately for dollars to exchange is part of the money supply. And every Thursday 200 00:19:21.800 --> 00:19:28.460 at 4.30, the Fed receives reports that allows it to quantify what the money supply was in 201 00:19:28.460 --> 00:19:33.820 the economy, what the different accounts, how many dollars were in different accounts 202 00:19:33.820 --> 00:19:36.320 from the previous week's Monday, okay? 203 00:19:36.320 --> 00:19:37.560 So let me sum up. 204 00:19:37.560 --> 00:19:39.600 There is a single supply of money in the economy. 205 00:19:39.600 --> 00:19:41.280 It can be measured. 206 00:19:41.280 --> 00:19:43.600 It is composed of concrete units 207 00:19:43.600 --> 00:19:47.200 that are stated in a common denominator. 208 00:19:47.200 --> 00:19:51.500 So there is a complete fabricated myth 209 00:19:51.500 --> 00:19:54.040 that the money supply cannot be meaningfully measured. 210 00:19:54.040 --> 00:19:56.580 Now let me just end by saying one other thing. 211 00:19:56.580 --> 00:19:57.960 The myth that the money supply 212 00:19:57.960 --> 00:19:59.760 cannot meaningfully be measured 213 00:19:59.760 --> 00:20:05.080 directly contradicts the entire method of macroeconomics, which is based on the claim 214 00:20:05.080 --> 00:20:11.240 that almost anything can be aggregated. Macroeconomists aggregate or add together into one figure, 215 00:20:11.240 --> 00:20:16.840 which is called the GDP, we all see this coming out every quarter, the entire output of the 216 00:20:16.840 --> 00:20:21.360 U.S. economy, despite the fact that there is no common unit available for adding together 217 00:20:21.360 --> 00:20:28.360 personal computers, Shaquille O'Neal's basketball services, McDonald's hamburgers, Barry Manilow 218 00:20:28.360 --> 00:20:54.360 Macroeconomics claims to meaningfully calculate an aggregate price level and an inflation rate for the entire economy, despite the fact that each household in the American economy purchases a different collection or basket of goods, the prices of which change at different or varying rates. 219 00:20:54.360 --> 00:21:15.360 So it is especially absurd and contradictory for the macroeconomics profession to claim that money, a good that is expressed in homogeneous units like dollars or pounds or euros, cannot be meaningfully aggregated, but such is the way of monetary cranks from ancient times to the present. Thank you.