Re: Austrian & Keynesian Theories Vs. Mathematical Facts
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goes, as a courtesy to you, and an opportunity to learn, I listened to much of Rothbards talk, especially from 70 minutes forward as you suggested. First, he covers what has already been soundly rebuked, that is the “business cycle” and then he moves on to another superstition; fractional reserve lending. I was unable to discern any mention of what a debt based money system is or isn’t. Please directly quote the point you/he are making about debt/wealth money systems.
Listening back on it I guess it was not directly about money creation but instead about government financing. In your world of sovereign credit, this is mostly the same thing. You are correct that in the Austrian world, these are distinct processes and Rothbard is only discussing financing, not money creation.
The point he makes is that there are three ways the government can finance its operations.
- Print money
- Tax or Borrow from its citizens
- Borrow from the banking system
Sovereign credit would effectively be 1), most Austrians probably want some form of 2), and yet we actually live under a system we both hate 3). What I was pointing out was his criticism of 3) where he discussed the absurdity of paying interest to banks to create money they don’t even have. Listen around minute 74 for his critique. This seems to indicate (at least to me) that he is aware of the problem and is not a supporter of it.