Economics, Libertarianism

Talking Austrian Economics (and Libertarianism) on “Scully: The World Show”

Back in June, I taped an episode of PBS’s “Scully:  The World Show” as part of their “Free Market” series sponsored by the Montreal Economic Institute.  That interview (all 30 minutes) is now up on the web for your enjoyment. It starts with Austrian economics and wanders into libertarianism.


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Author: Steve Horwitz
  • Rick

    Steve, very good interview but I don’t understand the obsession with competing currencies. Arguably that’s part of the problem we have now, i.e., that too many currencies and currency substitutes, both at home and abroad, compete with the U.S. dollar, which incidentally, is the only currency in the world that offers depositors the option of holding accounts in either: (1) a privately issued “elastic” dollar, the Federal Reserve Note; or (2) a fully public one, the current U.S. coined dollar.

    • CT

      Well, the first problem ‘Austrians’ have is that the dollar is “elastic”. Most Austrians believe that a free market in money will lead to a much more “inelastic” currency (they believe this is a good thing).

      • Steven Horwitz

        First, the FRN is not “privately issued” when it is a gov’t-granted monopoly. Second, it is TOO elastic in that it is fiat money with no constraint on the issuer’s ability to create more.

        Genuinely private competing redeemable currencies/deposits would be sufficiently elastic, but not too elastic. Like other markets, it would enable suppliers to match the demand for their product.

        • Rick

          Steve, that’s my point. The Federal Reserve Corp. (Fed) does not have “a gov’t-granted monopoly.” Those who object to the (presently extreme) elasticity of the Federal Reserve Note have a right to object to it, and to demand the Treasury Department’s own current coin. Doing this (at any U.S.-incorporated bank) doesn’t make the Fed go away, but at least lessens its power as a money issuer and makes the Fed a kind of teddy bear or “fiscal agent” (servant) of Congress and the Treasury.

          • Sean II

            That’s a bit like saying your local police department doesn’t have a monopoly on the legal use of force, because hey, you can also get thrown in jail by a dazzling array of competing agencies like the FBI, the DEA, etc.

          • Rick

            Sean II, all those agencies you mentioned, including the local police force, are fully public corporate entities or sub-divisions of the federal or state governments.

            But the corporate structure of the Fed is different, and unique in that it’s a quasi-public corporation, part private with private shareholders, and the other part belongs to the fully public federal government.

            The money-issuing power of the Fed, i.e. lending money into circulation or lending it to the federal government comes from the private dimension of this corporation, which as I said above, can be avoided only by claiming and demanding current coin that is issued by the Treasury under Article 1, Section 8, Clause 5.

            But the main point is that there is a meaningful choice of currencies and the Fed does not have a monopoly on money issuance. (Meaningful in the sense that the legal tender privilege Congress conferred on the Federal Reserve note has been regulated by a special income tax (actually 4) since 1937, and that privilege is removed when the use of Federal Reserve notes is properly objected to.)

          • Sean II

            Excuse me, then let me modify that slighty:

            “That’s a bit like saying your local police department doesn’t have a monopoly on the legal use of force, because hey, the jail they throw you into is ‘part private with private shareholders’…”

            Also, if you really believe there is a meaningful choice of currencies already, one way to test that idea is by asking how many people avail themselves of the alleged alternative. If the answer is “almost none” or “some insignificant fraction”, then you have to explain that somehow.

            I, for example, reject the claim the we enjoy a “right” to trial by jury, simply because 98% of cases are settled by plea bargain. That to me is proof enough that sufficient barriers have been raised against the exercise of our rights, to make the right itself meaningless.

          • Rick

            No argument from me about the shortcomings of U.S. lawyers and our legal system in general. Very disappointing. Hopefully it’s changing. I know law schools are now starting to seriously question their relevancy.

            But aside from that, it’s much easier to fight for laws and rights that are already in place (albeit ignored), than to fight for a new and questionable system of competing currencies.

            Also, regarding the barriers to claiming our rights, many have been put there deliberately through the use fear-based psychology, likely by those who somehow benefit from central banking/planning. Your “what’s the use in claiming my rights” is a good example of how successful this psycho-political campaign has been.

          • Sean II

            I don’t went to get caught up in the analogy, but there is nothing “fear based” about taking a 5 year plea bargain when you have a 25% of chance of losing at trial and catching a 30 year sentence. That’s what you call “totally rational” since 30 x .25 = 7.5 > 5.

            But returning to the point. If everyone is using Federal Reserve monopoly money – and they are – that means they don’t really have a choice, and the Fed does have a monopoly in the only way that matters.

          • Rick

            If that’s your view, then I must agree: You have no choice and you must hope that some political force will some day make the Fed go away. I’m just trying to let you know how the Fed’s lawyers likely view their position. In their view the Fed has not usurped Congress’s power “to coin money” under the Coinage Clause because you *do* have a choice in currencies, and the Fed must subordinate itself to Congress as their fiscal agent if you make them.

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