tag:blogger.com,1999:blog-2277215496195926573.post3819113035461223933..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: The flaws in free banking.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-82375938631983112013-10-29T03:17:01.040-07:002013-10-29T03:17:01.040-07:00George,
Re my having “grossly misstating the dat...George, <br /><br />Re my having “grossly misstating the dates of the Scottish and Canadian free-banking episodes”, I said 100 to 200 years ago above (for the sake of brevity). In contrast, your talk said (starting at 2.30 mins) that the Scottish system existed between about 1750 and 1850, while the Canadian one lasted from the late 1800s to early 1900s. I suggest my “abbreviation” was fair enough.<br /><br />Plus readers will be able to judge for themselves whether that abbreviation seriously affects the arguments for or against free banking. I think not.<br /><br />Re central banks and fiat money, I accept that my point No 3 rather implies that central banks have always issued fiat money. Point taken: I should have worded that differently.<br /><br />However, and first, that doesn’t have much bearing on the basic argument here, since central banks currently issue fiat money and have no intention of returning to gold. Second, while the Bank of England wasn’t SUPPOSED to issue fiat money in the 1800s, I seem to remember from Bagehot’s book, that in one or two of the panics in the 1800s, the surreptitiously DID issue it.<br /><br />Next, re your claim that I denied that private bank notes had ever been discounted, I said no such thing above. Indeed, in point No 4 I said that notes were exchanged at par “except where a bank was seen as being in trouble.” That makes it clear that sometimes notes WERE discounted.<br /><br />Next, you say that my claim that you want to “retain central banks” is a “grotesque misrepresentation of my views”. Well here are some actual passages from your talk (20.37 onwards) which make it clear that you very much see a role for central banks or some sort of central monetary authority if and when free banking is re-introduced:<br /><br />“in that case, a switch to free banking does not solve the problem of overall money management. You'd still need to do something about regulating the supply of the basic money, still in the hands of a central authority..”<br /><br />”the central bank would still be the source of reserves for the system and so it would still maintain the capacity to control the overall scale of money creation, and so control the rate of inflation or deflation, or could contribute to the business cycle through its manipulation of the reserve supply..”<br /><br />“Free banking does not solve the problem of overall money management. You'd still need to do something about regulating the supply of the basic money, still in the hands of the central authorities.”<br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-56416531683823379372013-10-28T07:25:24.759-07:002013-10-28T07:25:24.759-07:00With all due respect, Ralph, your summary of my cl...With all due respect, Ralph, your summary of my claims is inaccurate in too many ways to cataloguein any detail. But to give your readers some sense of what I mean, in your first bullet points alone, you have me grossly misstating the dates of the Scottish and Canadian free-banking episodes, arguing as if central banks have always issued fiat money, and denying that private banknotes have _ever_ been discounted, even in the U.S.! <br /><br />I have enough confidence both in my knowledge of the subject and in my abilities as a speaker to know that these claims reflect, not my own sloppiness, but your lack of attention. The same can be said for your characterization of my policy recommendations--e.g., the claim that I want to retain central banks, which is another grotesque misrepresentation of my views. <br /><br />It goes without saying that your criticisms of my talk, and of free banking more generally, miss their mark. George Selginhttps://www.blogger.com/profile/03106618641653835537noreply@blogger.com