What Does the Image of God Have to Do with Economics?

The first question the “Westminster Longer Catechism” asks,

 What is the chief and highest end of man?

The answer, drawn from Scripture, says,

Man’s chief and highest end is to glorify God, and fully to enjoy him forever.

In a way that is perhaps surprising, we can do these things – glorify God and enjoy him forever – in a particular way through the discovery and sharing of economic truth.

If we cannot pursue economic understanding in a way that glorifies God, we should indeed close up that intellectual shop. Important biblical truths, however, direct us to view sound economic principles as part of the created order. Rather than distracting us away from glorifying God, they become the very vehicle by which we behold his glory all the more.

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Austrian Student Scholars Conference

My department chair has just sent out the following release:

Grove City College will host the tenth annual Austrian Student Scholars Conference, February 7-8, 2014. Open to undergraduates and graduate students in any academic discipline, the ASSC will bring together students from colleges and universities across the country and around the world to present their own research papers written in the tradition of the great Austrian School intellectuals such as Ludwig von Mises, F.A. Hayek, Murray Rothbard, and Hans Sennholz. Accepted papers will be presented in a regular conference format to an audience of students and faculty.

Keynote lectures will be delivered by Drs. Tom Woods and Nikolay Gertchev.

Cash prizes of $1,000, $750, and $500 will be awarded for the top three papers, respectively, as judged by a select panel of Grove City College faculty. Hotel accommodation will be provided to students who travel to the conference and limited stipends are available to cover travel expenses. Students should submit their proposals to present a paper to the director of the conference (jmherbener@gcc.edu) by January 1. To be eligible for the cash prizes, finished papers should be submitted to the director by January 15.

Janet Yellen: No Bubbles

Au contraire, says David Stockman in this interview by Daily Ticker. As reported by Lauren Lyster,

Stockman argues that “we have bubbles everywhere" -- in junk bonds, stocks, and a housing market “riddled with speculators.” He blames the Fed for “dripping monetary morphine into Wall Street” and creating these bubbles, and he calls for the Fed to stop its easy money policies immediately.

You can watch the entire, brief interview by clicking here.

Interested parties will be happy to know that Tom DiLorenzo's review of Stockman's most recent book, The Great Deformation has just been published in the Quarterly Journal of Austrian Economics.

The Fed's the Problem, not Yellen

So says Peter Klein in Investor's Business Daily. I think he's right. Since the inception of the FED, the dollar has lost ninety-two percent of its purchasing power and we have suffered through numerous painful depressions. That happened not only during the Bernanke chairmanship, but over the tenure of fourteen different FED chairman.

The FED was championed by bankers and their intellectual supporters as a necessary means to provide for more orderly adjustment of the money supply, allowing for an elastic currency. It was later argued that a wisely managed credit system promotes the production of goods, so neither excess monetary inflation nor deflation is desirable. Such a view quickly morphed into justification for price stabilization policy and then full-orbed macroeconomic and financial stabilization policy. The conventional rhetoric is that the FED is indispensable to protect us from both price inflation and deflation as well as general economic disaster.

In reality, of course, from the beginning the Federal Reserve System was deliberately designed as an engine of inflation, the inflation to be controlled and kept uniform by the central bank. FED inflation led to the boom of the 1920s and the recession of 1929 that was turned into the Great Depression by invention on the part of both Hoover and Roosevelt. The actions of the FED coupled with Roosevelt taking us off the domestic gold standard and the creation of the FDIC in 1933 made possible even more inflation in the years to come.


After World War II the world suffered under the Bretton Woods System. The U.S. dollar backed by gold and all other currencies backed by the dollar. It turned out to be a pretty good set up for the United States temporarily. As Murray Rothbard explains in his What Has Government Done to Our Money?, it was thought that the Fed could inflate with impunity, for it was confident that dollars piling up abroad would stay in foreign hands, to be used as reserves for inflationary pyramiding of currencies by foreign central banks. The United States dollar could enjoy the prestige of being backed by gold while not really being redeemable. Keynesian economists arrogantly thought foreigners were stuck with the resulting inflation, and the U.S. authorities could treat the international fate of the dollar with “benign neglect.” During the 1950s and 1960s, however, West European countries reversed their previous inflationary policies and came increasingly under the influence of free market and hard money. They began to demand gold for dollars until in 1971 Nixon was forced to “close the gold window.” Thanks to FED-generated monetary inflation, the United States was and reamains on pure fiat dollar standard. The last market check on inflation was removed and inflation spiked and the value of the dollar has plunged.

The FED has given us monetary inflation and a whithering away of the dollar's purchasing power. It has bankrolled massive government debt and fostered much financial and economic instability by facilitating malinvestment and the business cycle. Such is the 100 year history of the FED regardless of who was in charge.