Human Action, pg. 415
Just tracking a few random things down, so I'm not reading a lot of this. But he has some good stuff in here on money. I also like what he says next, and we can think about this in much broader terms than just money:
"These thinkers are misled by the widespread belief that a state of
rest is more perfect than one of movement. Their idea of perfection
implies that no more perfect state can be thought of and consequently
that every change would impair it. The best that can be said of a
motion is that it is directed toward the attainment of a state of perfection
in which there is rest because every further movement would
lead into a less perfect state."
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What makes you believe that a static money supply is somehow related to Ron Paul? Just curious, because Paul's ideas on money seem to be the most consistent with Mises's conception of money (i.e. market money, or money competition).
ReplyDeleteThe stable purchasing power point - Ron Paul repeatedly bemoans the eroding purchasing power of the dollar. I don't think Mises has said here that the money supply itself should be static.
DeleteDo you know Paul's position on fractional reserve banking? I'm not sure - I'm genuinely curious.
I kind of had an idea that it was the use of the word "stable". I would tend to think that what this means is that is is reflective of the market, prices, and the available resources, not necessarily that it is unchanging.
DeleteMost Austrians that I know (including myself) believe that the money should be a produced commodity on the market, one that is freely chosen by market participants as the money, and one whose production is entirely dependent upon the current state of the market. In other words, the money should be just as scarce or abundant as the market reality dictates, not one that is freely increased/decreased at the whims of state compulsion, or ... ahem ... policy.
When Ron uses the word "stable", that is essentially what he means: the money is created on the market, based upon current valuations, investment and production; not through the arbitrary whims of the state (who can create money by just adding digits to a ledger). Obviously, since it is a market-created money commodity, its value is prone to fluctuation, based upon the law of supply and demand. However, this value is a reflection of the money's exchange-value vs the use-value of the good that it is exchanged for, thus, because it is a market-created money, one that is exchanging for market-created goods, it is called "stable" because it is entirely reflective of the current valuations within the market at any given time.
I'm pretty sure that Paul is against FRB. However, since my own opinions on FRB have changed quite dramatically over time, I imagine that the same could be said of him.
Oh, dear. Are you really trudging through that tome? Best wishes.
ReplyDeleteNo, no - just tracking down a few loose ends.
DeleteCouldn't these quotes be focused on price-level stabilizers? I suppose that could loosely be an attack leveled against the broad "sound money" folks who attack the amount of value that the dollar has lost since 2013 (more dramatically since 1971). But given Ron Paul's rothbardian foundation, and Rothbard's attack on the stabilizers of the 1920s, I find these quotes and their alleged critical target up for debate.
ReplyDeleteWhen Mises says these things he's generally targeting two groups. Firstly, those that think that gold standard prevent price level movements because the price of gold is constant. The price of gold isn't constant even under a gold standard, though it may not change much. His commentary on this and Hilferding's criticism of him in "The Theory of Money and Credit" is quite funny if you know a bit about the German hyperinflation. Secondly, the demand for money still affects the price level. The demand for money is somewhat similar to V in monetarism.
DeleteMises is always looking for a monetary regime that will behave reasonably. He's not looking for optimal behaviour at any particular time, no regime or system can provide that.
Daniel, say what you will about Ron Paul, he is a super nerd and has read a ton of Mises. To bemoan the loss of 9_% of purchasing power isn't to fetishize a constant purchasing power. In fact, Ron Paul could probably give a 10 minute impromptu talk on why Irving Fisher's goal of a stable dollar was bad.
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