[swalsh81]

Mises’ regression theorem explains the origin of money. I am going to argue for and against the original understand of the regression theorem at the same time here.

Mises’ regression theorem explains the origin of the CONCEPT of money. original money came into use because it was a universally accepted commodity that fit a basic set of physical characteristics: divisibility, transportability, durability, etc. Bitcoin fits all of these characteristics but it has basically no value outside of exchange. This is where I think that perhaps the regression theorem might get clarification. Going from barter to a money economy instilled in society the conceptual benefits of money over barter. Now, fast forwarding n millenia, we understand the values of money. From that point, new types of money need not necessarily arise from a commodity as long as it is universally trusted and accepted as 1/2 of every exchange. The creators of bitcoin created it in such a way that it met all of the practical physical qualities of money but that it was still a scarce resource. Hard coded into the code that now resides on many millions of interacting computers is the limit of 21 million bitcoins to ever be created.

I dont see why the regression theorem must necessarily apply to all forms of money ever to be used as much as it is a historical account of the origin of the concept of money and an account of why various commodities have, in the past, come to be used as money. But I dont think that being a previously used commodity must necessarily be a requirement of all things that ever become a “money”.

[swalsh81]

One of the characteristics of depressions is that they are caused by a misallocation of resources. By buying up what he believed to be surplus, he created a higher demand for the goods of farm production there by increasing production. When farmers knew that they would be sure to have a buyer there was no reason for them to curb their production, causing the surplus. So, what he was ultimately doing was exacerbating the misallocation problem by tying up resources in farm production that would have been better used elsewhere.

The goal in a depression is not to get or force prices down so the depression can be resolved, the goal is to allow the market to clear itself and reallocate resources to their most productive uses. Lower prices during this process is a byproduct of the reallocation, but by simply lowering prices by any means necessary is not the answer. You cannot for the process to go faster by artificially causing one of its side effects.

So, yes lower prices are a part of the reallocation process, but forcing prices lower (which of course wasnt his goal) doesnt help, rather it further encourages misallocation and prolongs the reallocation process, i.e. it prolongs the depression.

[swalsh81]

it would seem that some of this lies in the status of the south at the time that he called for conscription. according wikipedia, he can call up troops “whenever the United States shall be invaded, or be in imminent danger of invasion from any foreign nation or Indian tribe.” or “whenever the laws of the United States shall be opposed or the execution thereof obstructed, in any state, by combinations too powerful to be suppressed by the ordinary course of judicial proceedings, or by the powers vested in the marshals by this act”.

Once the south seceded, which was perfectly legal, they were their own country. Thus, he could only have sent troops into the south if they were threatening invasion of the north, since, in regards to the second provision, they were no longer states subject to federal laws.

As far as whether those acts legalize conscription in the first place, I am unsure in the wording.

[swalsh81]

Walter Block gets into some of this in the Q/A section of this playlist. http://www.youtube.com/playlist?list=PL879B7795698FED32

There is an interesting aspect to questions like this. If we could say definitively how something would function in an entirely free market and we could say definitively that is would function better that way than the current system, then we could centrally plan it that way. But the entire argument against central planning is that central planners do not know what would work best. If a monopoly of coordinated police/court systems is what works best, then that is what would likely arise voluntarily in the market. If it is competing private courts and security firms that would function best, then that is what would likely arise in the market.

We can philosophize about how it might function or other things that could be done (and that is a good thing to do), but we will never know all the ins and outs of how a completely private system would function until we allow the market to work out the details. But we can probably say this: If it requires force in order to fund a certain method of providing police and courts, then it is very unlikely that this is the system that is demanded by the market.

[swalsh81]

Why is it falling? I am not entirely sure. I heard one explanation being that the Chinese economy is slowing and they are the second largest buyer of gold. Not sure

But, I will take on the part about speculation and stunting growth.

The point of the Keynesian theory is to level out the supposed boom and bust cycle inherent in the free market. The validity of the idea that business cycles are a feature of the free market and not of government controlled economies is pretty flimsy as you have probably learned in these courses.

Speculation

Speculation is an interesting discussion. Keynes’s prescription for control economies was for governments to save during the booms and spend during the busts thereby leveling out the cycles he believed to be inherent in the free market. Austrians on the other hand believe that sharp booms and deep, prolonged busts are, in fact, the result of government meddling. Now, in theory, Keynes prescription might work…sort of. What would be the point? when there is a surplus of goods and general prosperity for whatever reason, government soaks up purchasing power and then releases it during the bad times. The goal for Keynes is to have price stability across goods and services, the ability to prop up the labor market during a bust and things like that.

What does that have to do with speculators. Speculators are doing the EXACT thing that Keynes wants government to do. During booms in one market, speculators buy up cheap surplus goods, wait for demand to increase in relation to supply and then they release those goods onto the market when the price goes up. If they are buying more goods when prices are low, this increases those prices. if they put those goods onto the market when prices are higher, then it lowers prices. Speculators are speculating on what? the future price of a good on the market. In other words, if they think prices will soon spike, they will buy now raising prices some now with the anticipation of selling them at a higher price and lowering the price then. They are leveling prices not perpetually increasing them. (search “Speculation in Man Economy and State http://mises.org/Books/mespm.PDF)

So, why should government not do what I just said the market does? Well there is the calculation problem from Mises. Basically, no one person or small group of people is capable of calculating how the millions of units of millions of different goods and services are best distributed in the economy to fit the demands of every person. But even if there were some computer program that could provide this instant answer, Hayek explained that there would still be a knowledge problem. The amount of information that would need to be gathered from every person would be too ridiculous to think about gathering and even if you could manage to gather all the information need, you can still not compare the subjective value between individual and, by the time all this information was gathered, the values scales of individuals would have changed.

Thus, it is better to leave the leveling of prices over time to thousands and thousands of individuals who specialize in one or a few markets who are putting their own cash or businesses at risk rather than to a small committee in government disconnected from the markets and the incentives provided by profit and loss.

Limiting Growth

This argument is pretty much a complete misunderstanding of economics. The argument goes something like this. If there is a limit to the amount of money, then as more goods are available to more people money is spread thinner and thinner through the economy. With less and less money spread around, prices would have to fall. If people see falling prices, they will wait to make purchases. If prices continue to fall, people will continue to wait. No one will buy anything, money will stop flowing through the economy and the entire economy will collapse. I assume you are using this website on your personal computer. But, even with general inflation, computer prices have fallen about every year. So why did you buy a computer (say… this year)? Because you still valued the services of your computer over the course of this year more than the money you would have buy waiting until next year to buy one. This would be the case for most goods and services. People are not going to perpetually wait to buy food, clothes, the next iPhone, a car, a house, etc, if they value the use of that item now more than the money saved by waiting. Yes, if there is a fixed amount of money then prices will fall, but that is not necessarily a bad thing and it is not going to collapse the economy.

Yes, prices will fall and this will also lead to more savings. But savings, in the form of savings accounts (the type in a non fractional reserve system) and investments. this money will just go right back into the economy in the form of capital investment. It doesnt sit idle in someones mattress. Keynesians want consumption now. Austrians are looking at a long term picture where there is investment in capital, an extension of the capital structure, and greater long term growth in production.

But besides all of that, at least around here, people are not calling for a gold standard as most Keynesians believe it to be. When Keynesians decry a gold standard, they are talking about a government decree stating gold is the only valid currency. What most free market austrians advocate is competing currencies and it would eliminate this argument all together. If the amount of one form of money (say gold) become too low to be practical for use in the market, then the market will, basically on its own, begin using other currencies like silver, copper, bitcoin, whatever comes along. It is not that the dollar should be replaced with gold, but that we should let the market take over issuing of currency.

Of course, they can say that the dollar isnt prone to wide fluctuations because they are using the dollar as their ruler. if you measure a ruler using itself it will always look straight.

I probably did alot of straying from the target on this post. Feel free to ask some questions that get me a little more focused ;).

[swalsh81]

http://www.lewrockwell.com/blog/lewrw/archives/135452.html

[swalsh81]

Watch for what happens in arizona. there is talk of arizona making gold and silver legal tender in that state which is completely constitutionally acceptable. It is just a matter of other unconstitutional laws passed since then. If there is no interference by the national government and they also do not attempt to hut down bitcoin (very hard, they would have to basically shut down the entire internet or buy every bitcoin themselves), then i dont know what the problem would be legally with having a gold warehouse distributing paper or digital currency.

[swalsh81]

Agree with Samgheb on one last tab on the menu on Tomwoods.com. (though I would expect it to be between media and events.) I think the same page on a libertyclassroom.com address could be linked there and as an option under the “freestuff” tab on libertyclassroom.com itself.

The page would probably just consist of a small paragraph saying something simple like “this is an ever growing list containing resources on various topics.” and the short explanation of why you have compiled pages like those that you give in quite a few of your youtube videos. “people are always asking for sources so, I made a page…”

[swalsh81]

Check out this book. it isnt exactly the most gripping read in the world but it explains this. http://mises.org/document/6116

Basically, Hutt argues that, for all practical purposes there are no idle resources in the Keynesian understanding. There may be resources that are not currently used but they are not being used because their most valued use in the market it to wait for use in the future.

When the government tries to employ unused resources through spending projects, it will likely pull just as many resources from existing uses as it does from idle resources, if not more. Further, even if government projects are able to pull ALL resources for a new project from idle resources, this is interfering with the use that is most valued by the market, to wait for use in the future.

As far as labor employment, in an unhampered economy, prolonged unemployment for an able worker only happens by choice whether he values leisure over work, or holding out to find a job with more money, or other reasons. Unemployment is either caused by government interference or by personal choice.

[swalsh81]

it seems like all the criticisms I have seen have come from the skeptical libertarian blog and are all aimed at Gary North. I would be interested to hear Dr. Woods take on it.

[swalsh81]

In fact I began writing an “I second this” response before I finally found that list. It isnt obvious at all.

[swalsh81]

Try the bottom of this page. https://libertyclassroom.com/free/ …though the placement of this list seems like an afterthought and could possibly be placed on their own page. Under the free stuff tab at the top, there could be 2 options: course samples, and resources by topic. or something like that.

[swalsh81]

I think you need to make a distinction between what economics means by scarcity and the common definition of scarcity. When economics talks about scarcity, it is not necessarily talking about something that there is a small amount of (the standard definition of scarce). In economics, scarcity refers to something that is not a general condition of human existence. Something that cannot be infinitely replicated. Something that, when you want it, it doesnt fall into your lap. Some things that, practically, come close to that are also not considered scarce: like air. And, of course, these would be things that you want as opposed to things you do not.

But lets take, for instance, as you suggested, something where “there are more resources than people and thus every person has the ability to be an individual producer of some specialized labor for the goal of a certain (or possibly many) products,” Lets say that the only means of production of this item (something that is to be consumer as opposed to research to develop new knowledge) is some non scarce resource and human labor. Even when this is produced, the product is still scarce because it requires something scarce (human labor) as a means of production. Labor must be economized and therefore all goods that are produced using human labor are scarce and must be economized.

Of course this is all not talking about the development of “recipes” which is the plan or method by which something is produced. A recipe is never consumed, never worn out and is used every time something is produced

I dont remember where I read this example but it fits here. I mentioned that air is not considered scarce, it is taken as a general condition of human existence on earth, But air conditioned air (heated or cooled depending on the season) is scarce as it requires other means that are scarce in order to produce it.

[swalsh81]

According to Rothbard in “America’s Great Depression” (I havent read the whole thing yet but I have heard many reference it) the 20s were characterized by significant innovation and economic growth. Under normal circumstances, this would cause prices to drop because production efficiency would allow goods to be produced better and cheaper per unit (like computer products today which are dropping in spite of the feds monetary inflation). But this wasnt what we saw. Prices were either level or rose across the board. This leads Rothbard to conclude, and he explains this better in his book, that there was monetary inflation/credit expansion due to the fact that prices across the board did not drop but were level or increased coming up to 1929. As I remember he goes on to prove this thesis using data from the time.

So yes there was prosperity, there was innovation, there were increases in efficiency but there was an underlying bubble that popped in 29 due to malinvestments made during the bubble.

http://mises.org/document/694/Americas-Great-Depression

[swalsh81]

How is it possible? Politics. If you remember, during bush there were antiwar protests going on all the time. But now, with Obama simply continuing and ramping up Bush’s policies, you dont hear anything about it. Why? Republicans like war and the democrat base likes democrats no matter what they do.

Until we can get people to take their political party blinders off, nothing will change.

This is kind of lie the other day when Hillary said “4 people are dead, What difference does it make now how it happened?” during the Benghazi hearing. If Bush or some republican had said that, it would have been all we heard about for the next month.

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