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FMJRA 12 – Sweet Emotion

November 14, 2009

Another week, another FMJRA Saturday another song from my youth –

Just two links this week

Honesty in Motion with Blessed are the Cheesemakers and The Classic Liberal who once again included me in his weekly round up. Just one little nit to pick with The Classic Liberal – There is no way that girl has a 32 inch waist. 22 is what I think he meant.

While we are talking about the Classic Liberals site – He has a post up today entitled “Applied Krugman” talking about commodity backed dollars and fiat currency –

In a late October post, Krugman attempts to discredit a commodity-backed dollar because it leaves “very limited room for maneuver.” You know … “expand” the money supply … print more dollars … aka counterfeiting money.

I am not an economist but if I remember things correctly it is this very ability to expand the monetary supply that stands behind Milton Friedman’s economic theories (monetarism). Lots of people seem pretty taken with Friedman and the CL himself quotes him approvingly at least twice (here and here), so I am a little confused. Is this ability desirable or not?

From my brief bit of research it also appears that a lot of the push for a return to a commodity based standard stems from the Austrian School of Economics. Again I am not an economist but it appears that those theories are open to some criticism also – Friedman, “The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false.” Correct or not? I don’t know. My guess is that like a lot of things the truth falls somewhere in the middle.


Another Black Conservative was on the Glenn Beck show. I’m not a Beck fan but I did watch a little to show some support.

7 Comments leave one →
  1. November 14, 2009 1:15 pm

    Friedman made that statement a few years prior to Hayek winning the Nobel Prize for proving the Austrian theory of the business-cycle correct. He was also, as you noted, a monetarist who adopted Keynesian theories on money and inflation.

    Friedman’s Chicago school and the Keynesians believe you can increase economic output by inflating the money supply. Austrians take a real-world view of monetary inflation, which is that it’s nothing but a fancy word for counterfeiting. And I have to find anyone who can explain how the Fed printing money would create anymore wealth than if you or I did the same thing at home.

    My post you linked to illustrates perfectly, why Keynesian/monetarist theory is flawed.

    The pieces of paper we call money is just that, pieces of paper. If dollar collapsed (and don’t kid yourself, it can) and you and I went to the store to stock up on goods, with you holding a stack of $10,000 bills and I’m holding a bag of gold coins, who is the store owner going to sell to?

    Me. Because all you have is a stack of paper. I, on the other hand, am holding something of value – tradable value – gold. And that’s the simplest explanation of why a commodity-based currency is so important.

    You’d choose the one you could trade for gold.

  2. November 14, 2009 1:18 pm

    Here’s something else to think about in terms of a commodity-based currency … see this post.

  3. jenn1964 permalink*
    November 14, 2009 7:16 pm

    You could be right. I don’t know. I do know that even when the US was on a gold standard there were economic cycles. I also believe that the maintenace of the gold standard lead to the rise of the robber barons of the 19th century which directly lead to the establishment of the federal reserve and the 17th amendment. I also know that there is not enough gold in existence to account for all the world’s economic activity unless you are going to artificially set prices. If you do that then the holders of gold will be wiped out.

  4. November 14, 2009 10:19 pm

    All questions that can be easily answered … but not enough time now. Going deer hunting for a few days, but what you’ve said deserves attention, so I’ll follow it up with a post next week.

    Here’s the super-short version:

    1. The robber barons are a myth.
    2. Fractional-reserve banking lead to the cycles that most people attribute to gold.
    3. The quantity of gold (or whatever commodity) is arbitrary.
    4. The Federal Reserve Act was passed at night on the last day before Christmas recess. Now consider how long it took to travel in those days … hardly anyone was around. The Federal Reserve was the first major creation of the Progressive movement. Now think about this … Do progressives today ever tell the truth about anything? Nope. Same as it ever was …

    Talk with ya in a few days!


  1. Mainstream Media Morons
  2. Elisha’s Gold
  3. Myth: There Isn’t Enough Gold

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