WEBVTT NOTE Commentary 1 00:00:00.000 --> 00:00:05.520 Okay, well, fortunately, Paul was the one person who actually didn't go over time. I think 2 00:00:05.520 --> 00:00:09.360 the moderator needs to be given a taser or something, because otherwise it's just sort of 3 00:00:09.360 --> 00:00:11.840 embarrassing. I'm holding up signs 4 00:00:11.840 --> 00:00:13.680 that, you know, 5 00:00:13.680 --> 00:00:17.960 might as well say, you know, draw a square circle, please, because they're not listening to me. 6 00:00:17.960 --> 00:00:19.720 Okay, let me... 7 00:00:19.720 --> 00:00:24.480 I was originally going to leave time for Q&A. I don't think we're going to have to. Let me just go through 8 00:00:24.480 --> 00:00:28.960 and comment on these papers. Obviously, in ten minutes, nine minutes now, I'm not going to be able to 9 00:00:28.960 --> 00:00:33.440 Do these papers justice? So let me just say a few observations for each one. 10 00:00:33.440 --> 00:00:39.680 For Guido's paper, he's touching on at least two very important things. 11 00:00:39.680 --> 00:00:45.360 One is the whole concept. What was he doing? He's talking about 12 00:00:45.360 --> 00:00:49.120 he wants to discuss the value, what's contributed by the existence of 13 00:00:49.120 --> 00:00:53.120 financial markets. And people take that for granted, but it's just driving 14 00:00:53.120 --> 00:00:57.120 me crazy with the analysis of the financial crisis right now when people 15 00:00:57.120 --> 00:01:03.120 We'll keep talking about, using this phrase, hopefully we thought we could contain it, but it's spreading to the real economy. 16 00:01:03.120 --> 00:01:12.120 And I alluded to that in an earlier session, but when you think through what that means, it's really scary that they're thinking the financial markets don't have that much to do with, 17 00:01:12.120 --> 00:01:17.120 or we could build a firewall in between the allocation of capital and the real stuff going on. 18 00:01:17.120 --> 00:01:25.120 When you think through the implications of what does that mean if someone is analyzing things, thinking that over here is the financial sector, then you've got the real economy. 19 00:01:25.120 --> 00:01:33.120 In Fairness, I understand when you're starting out, you've got to do price theory, things you do in real terms, then you lay money on top of it. 20 00:01:33.120 --> 00:01:41.120 I understand where that's coming from, but my point is just when people are analyzing the situation like today and using phrases like that, it's pretty scary. 21 00:01:41.120 --> 00:01:51.120 So I'm glad he's looking at this. Another great point that he was bringing up is this idea that hoarding per se, first of all, it doesn't destroy real wealth. 22 00:01:51.120 --> 00:02:03.960 The Keynesians are wrong when people hoard, it doesn't necessarily hurt things because 23 00:02:03.960 --> 00:02:10.120 you give it to the bank and then the bank lends it to somebody else and he spends it. 24 00:02:10.120 --> 00:02:16.200 The way that many free market economists combat the claims of the Keynesians is not to dispute 25 00:02:16.200 --> 00:02:19.560 the notion that spending is what drives things is that they say no no no actually when people 26 00:02:19.560 --> 00:02:23.640 say that it does get spent don't worry about it it's not really lost because it gets you 27 00:02:23.640 --> 00:02:27.080 know I'm saying so that's what's good about Guido is he's shown that even if it isn't 28 00:02:27.080 --> 00:02:31.520 spent even if you did put it under your mattress that that's okay because it's not the money 29 00:02:31.520 --> 00:02:36.360 you know per se especially for on paper currency that's the source of wealth that's you know 30 00:02:36.360 --> 00:02:41.880 tractors don't disappear because somebody put something in his piggy bank right so that's 31 00:02:41.880 --> 00:03:11.880 Moving on, Joseph's paper on William Douglas. He did read some quotes, but again, for those who are interested in that sort of thing, I would encourage you to email him and get copies of it because, for one thing, the way those guys wrote back then is very refreshing. Their titles are 16 lines long, a discourse upon that, and they spell politics with a CK at the end. That's always fun. That sort of stuff, but truly, it is nice. 32 00:03:11.880 --> 00:03:17.600 My one recommendation would be to include some more quotes from his opponents, just so the 33 00:03:17.600 --> 00:03:22.800 reader can understand exactly what was he knocking down, as opposed to just summarizing 34 00:03:22.800 --> 00:03:27.260 in the text, this was the prevailing view and then this is what Rothbard or William 35 00:03:27.260 --> 00:03:30.440 Douglas set against that. 36 00:03:30.440 --> 00:03:35.280 Just a few other things that occurred to me, I was talking about people were intimidated 37 00:03:35.280 --> 00:03:40.320 by William Douglas because of his medical knowledge, but I think I know what doctors 38 00:03:40.320 --> 00:04:03.320 I would be afraid of a doctor as well, so that was another random thing that occurred to me, it might be a good argument against fiat currency, he was talking about the orgy of paper money, so I think you could say to someone, if you're going to have an orgy, do you want to involve paper money, you know, and I won't even discuss a pun involving hard money. 39 00:04:03.320 --> 00:04:15.520 Okay, it's a good thing I don't have much time. Let's go on to Paul Swick's paper. The 40 00:04:15.520 --> 00:04:19.560 best thing about his paper was the abstract, which literally, I'm making this up, just 41 00:04:19.560 --> 00:04:25.960 says, this paper examines something that's kind of cool. That's the abstract. Now that's 42 00:04:25.960 --> 00:04:29.320 actually probably not good in terms of getting it placed in a mainstream journal because 43 00:04:29.320 --> 00:04:32.620 demonstrated preference, they obviously don't like papers that discuss something that's 44 00:04:32.620 --> 00:04:36.620 This is kind of cool, so I think most Muslims say this is not for us. 45 00:04:36.620 --> 00:04:42.620 Seriously, the one thing I would like Paul to either, you know, explain, maybe he can tell me afterward, 46 00:04:42.620 --> 00:04:49.620 explain this paper, this issue, this is a serious issue for, in the Austrian literature as well, 47 00:04:49.620 --> 00:04:57.620 this issue of, it's relevant right now, were Lyle Robbins and Hayek, were they responsible for worsening the Great Depression? 48 00:04:57.620 --> 00:05:27.620 and there's quotes, if you know Brad DeLong that name, he's a guy who's done some history of thought work on this and he's real big on, you know, the crazy Republicans right now are just like the crazy Austrians back in the 30s and what those people were doing back then was saying that, you know, the recession or the depression is good for us, you know, it penalizes us for the sins of the 20s with the Fed's expansion and, you know, you need liquidation. So DeLong's point is Hayek was just like the caricature of Mellon. 49 00:05:27.620 --> 00:05:32.100 liquidation and DeLong saying and even Milton Friedman recognized that this is 50 00:05:32.100 --> 00:05:32.740 crazy 51 00:05:32.740 --> 00:05:36.980 and then so what Larry White among others has done is to go back and show 52 00:05:36.980 --> 00:05:40.260 that well it's it's actually pretty nuanced what's going on there that 53 00:05:40.260 --> 00:05:45.260 there's a distinction between talking about you know not inflating or 54 00:05:45.260 --> 00:05:48.340 correcting the excesses of the of the malinvestments during the boom 55 00:05:48.340 --> 00:05:52.100 versus the 56 00:05:52.100 --> 00:05:56.780 sort of on top of that additional disturbances caused by the fact that 57 00:06:26.780 --> 00:06:30.940 It's just in general, we're afraid. So it's not just because, oh, I took out loans and 58 00:06:30.940 --> 00:06:35.740 my business grew more than it should have, but you can imagine even people who are running 59 00:06:35.740 --> 00:06:39.420 productive businesses, even with 100% reserves, it could just be this general panic and maybe 60 00:06:39.420 --> 00:06:43.500 that's why your business gets hurt. Is that also what Hayek said the government should 61 00:06:43.500 --> 00:06:47.420 expand to counteract that, or is it merely to counteract the fact that when people pull 62 00:06:47.420 --> 00:06:51.660 reserves out of a fractional reserve system, the whole money supply has to shrink because 63 00:06:51.660 --> 00:06:53.740 because of the reserve requirement. 64 00:06:53.740 --> 00:07:02.260 Okay, finally with Paul Prentice's remarks, again a very important topic and I've been 65 00:07:02.260 --> 00:07:07.660 noticing, maybe many of you have seen this too, that people, and at first they're joking 66 00:07:07.660 --> 00:07:11.040 but they're not really joking, it's getting more and more serious where people will say 67 00:07:11.040 --> 00:07:16.620 things like, you know, I see comedians, literally I've seen comedians say things like this, 68 00:07:16.620 --> 00:07:20.480 so my credit card company keeps calling me, you know, saying I owe them all this money 69 00:07:50.480 --> 00:07:54.080 I said in the beginning it was sort of jokes and people make, you know, when's my bail 70 00:07:54.080 --> 00:07:57.440 out coming? But I mean it really is, more and more people are talking like that and 71 00:07:57.440 --> 00:08:02.280 I think it's very true that it erodes the confidence, the belief in property rights 72 00:08:02.280 --> 00:08:07.220 and the sort of stigma against just violating contracts and stealing from people when the 73 00:08:07.220 --> 00:08:12.360 government's doing it right in front of your face and just so clearly, nakedly giving out 74 00:08:12.360 --> 00:08:17.480 tons of other people's money to groups because they're politically powerful. 75 00:08:17.480 --> 00:08:47.480 So one suggestion I would have for Paul's paper is this issue of, it is very nice, and certainly there's a way to say it correctly, but there's also some people say it a bit naively, this issue of when you deficit spend, oh it's like we're taking wealth from our grandchildren, and I'm not saying Paul did this, but just to be careful about this possible misinterpretation, Mises points out 76 00:08:47.480 --> 00:08:51.200 in several places that you know in the strictest sense everything that is 77 00:08:51.200 --> 00:08:55.240 produced today is out of present resources right so it's not like if we 78 00:08:55.240 --> 00:08:58.680 have a war and we can say do we want to borrow money and do it and say or sorry 79 00:08:58.680 --> 00:09:01.720 if we want to use it from tax revenue we'll know people would be up in arms 80 00:09:01.720 --> 00:09:07.640 okay well let's just borrow it and do it with borrowed funds that it's 81 00:09:07.640 --> 00:09:11.160 not literally that your grandchildren are you know you they're not taking time 82 00:09:11.160 --> 00:09:15.520 machines and pulling resources from 50 years in the future to make tanks now I 83 00:09:15.520 --> 00:09:20.760 I mean, the tanks are being made out of steel right now, all right? So that's, like I said, 84 00:09:20.760 --> 00:09:24.340 it doesn't mean that you can flip the other way and go, oh, we just owe it to ourselves, 85 00:09:24.340 --> 00:09:27.340 so there's no issue, you know, government borrowing is fine, you don't want to flip 86 00:09:27.340 --> 00:09:32.380 the other way, but it's actually very subtle to think through exactly what's going on and 87 00:09:32.380 --> 00:09:37.140 who's getting burdened, because, you know, your grandchildren, the people who are the 88 00:09:37.140 --> 00:09:40.960 grandchildren of those selling the bonds, you know, the bondholders that are getting 89 00:09:40.960 --> 00:09:45.060 those payments, they're obviously better off, so it's not an issue so much of intergenerational 90 00:09:45.060 --> 00:09:48.780 Transfer. It's more of the people lending the money to the government whose kids are 91 00:09:48.780 --> 00:09:53.060 then going to be the recipients of the taxpayers in the future who are going to be net losers. 92 00:09:53.060 --> 00:09:57.700 So it's not so much our generation versus them. It's more the people who are in cahoots 93 00:09:57.700 --> 00:10:02.260 with the government versus the other taxpayers who aren't the ones lending the money. 94 00:10:02.260 --> 00:10:03.660 Okay, we're out of time. Thank you very much.