tag:blogger.com,1999:blog-2433734171708230599.post2074448079393736669..comments2023-10-29T11:50:14.811-04:00Comments on Foundations of Economics: Was Mises Clueless about Currency Devaluation?Shawn Rhttp://www.blogger.com/profile/02129241997834251648noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2433734171708230599.post-42136428206516171932012-03-17T21:20:30.183-04:002012-03-17T21:20:30.183-04:00I think you are right. To the extent that we are w...I think you are right. To the extent that we are willing to accept GDP as a concept, real GDP is what matters as a variable that relates to actual prosperity.<br /><br />Now, the market monetarists would most likely argue that targeting a stable growth rate in NGDP is the best way of creating an environment for businesses to do their thing so as to grow real GDP. As you point out, however, they must ignore the distortionary effects of monetary inflation.Shawn Rhttps://www.blogger.com/profile/02129241997834251648noreply@blogger.comtag:blogger.com,1999:blog-2433734171708230599.post-39777797299323709012012-03-17T18:15:35.130-04:002012-03-17T18:15:35.130-04:00Lars Christensen's argument rests upon the pre...Lars Christensen's argument rests upon the premise that we should care about nominal GDP. I am not convinced that we should. What does it matter if nominal GDP is falling is real GDP is rising appropriately? Is the opposite what he desires? I would think not. Then what is the value of looking at nominal GDP? In that case, if the real concern is real GDP, then how can we conceivably support a loose monetary policy given the distortions in capital markets it will necessarily engender?TonyFernandezhttps://www.blogger.com/profile/07577417779317914721noreply@blogger.comtag:blogger.com,1999:blog-2433734171708230599.post-79408601182975509602012-03-06T13:45:33.642-05:002012-03-06T13:45:33.642-05:00Dear Shawn,
I can see it, but only dimly: althoug...Dear Shawn,<br /><br />I can see it, but only dimly: although I say that Mises exaggerated the technical difficulties of a implementing "ideal" monetary policy, I still recognize throughout the article the merit of Mises' assumption that the gold standard was the best available institutional arrangement by which to approximate his monetary ideal. Mises still had on his side the very strong argument that politics would prevent money from being responsibly managed.George Selginhttps://www.blogger.com/profile/03106618641653835537noreply@blogger.comtag:blogger.com,1999:blog-2433734171708230599.post-30324305329288757202012-03-06T10:25:53.246-05:002012-03-06T10:25:53.246-05:00Dr. Selgin,
You are right that I failed to includ...Dr. Selgin,<br /><br />You are right that I failed to include in my post that you conclude Mises could have made a stronger case for gold than he did. I apologize for my failure to do so.<br /><br />However, on page 262 of your article, you do write:<br /><br />"Mises’ ideal of a money with a constant inner objective exchange value (but with an outer exchange value that varied<br />directly with changes in real output) was thus, in essence, equivalent to the modern idea of a nominal income (GDP) target. Mises himself, however (perhaps because of his refusal to employ the equation of exchange as a tool of reasoning), never recognized the equivalence of a stable inner objective exchange value of money and stable nominal<br />income. This failure caused Mises to exaggerate the difficulties involved in efforts to deliberately achieve an ‘‘ideal’’ money and to overstate the relative advantages of a gold standard."<br /><br />Given your above paragraph, can you see how readers might surmise you think Mises' monetary ideal more compatible with stabilizing MV?Shawn Rhttps://www.blogger.com/profile/02129241997834251648noreply@blogger.comtag:blogger.com,1999:blog-2433734171708230599.post-63830001527238894702012-03-05T15:04:06.364-05:002012-03-05T15:04:06.364-05:00You might read my article on Mises and the gold st...You might read my article on Mises and the gold standard rather than rely on secondary accounts of it. Then you will see that I actually criticize Mises for not having made as strong a case for gold as he might have. "The Market Monetarists" claim that I say that Mises ought to have recommended NGDP stabilization is not one I ever made, in the article in question or anywhere else--and I commented on that blog to this effect. As you take that blog's misrepresentation at face value, I wish to correct the error here also.<br /><br />Here is the conclusion to my article: "Although I find Mises’ own arguments in defense of gold unsatisfactory, I have tried to suggest how an extension of those arguments could make for a more convincing defense of gold. This defense cannot, however, be sustained on purely theoretical grounds. Ultimately the merits of gold must be assessed in light of empirical (and statistical) evidence comparing the gold standard’s performance with that of historical fiat standards."<br /><br />The entire article is available online. If you can find any place in it in which I say that Mises should have favored stable MV over a gold standard, by all means include the proof on your post. Otherwise I hope you will correct the misstatement of my views.George Selginhttps://www.blogger.com/profile/03106618641653835537noreply@blogger.com