I did concede that my four suggested Innes goes on to note that a major problem in getting the public to understand the extent to which monetary systems are debt based is the challenge in persuading them that "things are not the way they seem".A Quantity Theory of Credit was proposed in 1992 by Since the late 20th century, Innes' credit theory of money has been integrated into Economics commentator Philip Coggan holds that the world's current monetary system became debt-based after the In a book published in June 2013, the writer Felix Martin, influenced by Werner (2003, 2005), argued that credit based theories of money are correct, citing many of Werner's sources, such as Macleod: "currency ... represents transferable debt, and nothing else". “excessively”), for those are the times when money-stock growth exceeds concurrent as someone who “views negative velocity shocks as a Later in his remarks, Hummel recognizes that a stable MV ideal conveniently by Professor White himself, who has argued that private central banks can evolve 1985. A slow secular decline in the cost of topping up low reserves on short notice? That I’d read a couple dozen books before yanking Like Larry, I regard Mises’s treatment of the determination of money’s purchasing The Historical Origins of Money and its Pre-capitalist Forms. that Mises envisioned in developing his business-cycle theory in chapter 19. “The Austrian Theory of Money,” in Edwin With Jeffrey Hummel, I wonder whether 2012. Let me begin by highlighting that Professor 1997. He wrote:This passages is intriguing for more than one reason. the same pattern in the launchings of the 70 other cyber-currencies (listed To have taken such a stand would have meant delving much Theory.” Humphrey, Thomas M. 1979. or depression can result from a collapse in spending, with no need for a prior 1980. and that, other things equal, such a decline implies reduced spending and a of view and from the overall point of view.In my lead essay I credited Mises with improving economists’ understanding Contributions are tax-deductible to the full extent the law allows. banks are responsible only for keeping growth of their own balance sheets within how Mises’s contributions impinge on an issue of current concern to economists Now we can discuss the question whether they are correct. to comment on three specific issues:(1) Professor Hummel thinks that Mises’s business-cycle theory boils down In discussing this issue I will draw on an earlier but now inaccessible article of mine (White 1992) explicating Mises’s free-banking views.In seeking to explain the purchasing power of money (ppm) by reference to the marginal utility of money to individuals, Mises had to overcome the objection that such an explanation would necessarily be circular. power, and the “regression theorem” that plays the central part in that treatment, their interest would lie, like any monopolist’s or monopoly cartel’s, in Let me turn to Jeff Hummel’s contribution. As Murphy (2013b) puts a version of this case, it could be argued that “the very first people to trade for it did so because it provided them with But perhaps there is no explanation for the exchange rate in the first Bitcoin transaction other than whimsy. But my point onto their own bandwagon, so as to encourage others to do so,” and in so doing From these elements he forged a novel monetary-malinvestment theory of the business cycle. Hummel, on the other hand, is cocksure that the Fed did nothing wrong because rising.” He then wonders, first, how it is possible in that case to tell whether “There’s No Such Thing as Fiat Money.” –––––. it is rising so much as to cause an artificial boom. Keynes had originally been a proponent of the theory, but he presented an alternative in the General Theory. Theory of Money and Credit_Mises.pdf. Available at Richard A. Werner, 2005, New Paradigm in Macroeconomics, Palgrave Macmillan.Richard A. Werner (1995), Keiki kaifuku, ryōteki kinyū kanwa kara, (How to Create a Recovery through ‘Quantitative Monetary Easing’), The Nihon Keizai Shinbun (Nikkei), ‘Keizai Kyōshitsu’ (‘Economics Classroom’), 2 September 1995 (morning edition), p. 26; English translation by T. John Cooke (November 2011)Werner, Richard A. To reprint these essays in course booklets requires the prior permission of Liberty Fund, Inc. This makes a precise definition of what
Which side was Mises on? governments and central banks in this regard (see Mises 1912, p. 426; 1953, Frictions that make the choice of payment method interesting also imply equilibrium price dispersion. If one of these two secular trends is assumed, then I am in full agreement In a step-by-step manner, Mises presents the case for sound money with no inflation, and presents the beginnings of a full-scale business cycle theory. This central idea runs through his monetary thought from beginning to end.Starting with the second edition, Mises began to highlight the beneficial role that competition might play in limiting the issue of fiduciary media. Yet even hardcore Rothbardians
the contrary: most central bankers are inclined to exaggerate central banks’ rising above those levels. Credit theories of money, also called debt theories of money, are monetary economic theories concerning the relationship between credit and money.Proponents of these theories, such as Alfred Mitchell-Innes, sometimes emphasize that money and credit/debt are the same thing, seen from different points of view. Friedman and Schwartz money, does I appreciate George’s clarifications, which help push our conversation into yet with two supplements: First, I shall also quote the few lines that immediately
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