My Part in the Great Right-Wing Conspiracy

by George Selgin July 16th, 2013 10:02 pm

Stephen Williamson, a well-known monetary economist with a blog of his own called New Monetarist Economics, was kind enough to draw attention there recently to my remarks concerning Gary Gorton's book. His post in turn elicited a sarcastic comment (anonymous, of course), the gist of which was that it was after all to be expected that a paid flunky of the "right wing" Koch brothers should be against regulating banks.

This isn't the first time someone has tried to tar me with that brush, and I don't suppose it will be the last. Nor do I suppose that by defending myself against such libels I will ever put a stop to them. Nevertheless the comments inspire me to do something I've meant to do for some time now, which is to explain the role that politics and ideology have played in my thinking generally and in my writings on free banking in particular.

First, for the record: I work not for any Koch-sponsored entity but for the University of Georgia, where I've been now for almost 25 years. (True, my first job was at GMU, but (1) my salary there was paid by the taxpayers of the Commonwealth of Virginia, and (2) I got the boot, and it wasn't for being insufficiently anti-Fed.*) Since I'm the only free banker at UGA, and I also haven't exactly been awash in roses and Valentine cards from its administrators, I trust that no one will be inspired by these revelations to claim that I'm a shill for the Georgia State Legislature, or the Board of Regents, or my University President, or any of the other persons responsible for my livelihood.

It's true that I'm also a "Senior Fellow" at the Cato Institute, and proud of it. But "Senior Fellow" is an honorary (that is, unpaid) title only. And though I have been paid to take part in Cato's annual monetary conferences, so too, at one time or another, have about four-fifths of the world's better known monetary economists and monetary policy makers. Finally, I've done some paid consulting for Mercatus and have lectured in the past for the Institute for Humane studies. But to have allowed the pittance I've gotten from both to suffice to turn me into a mere appendage of the so-called "Kochtopus," I'd have to have been a sucker all along.**

If I'm not actually paid, or paid enough, to espouse views not necessarily my own, then is it not at least correct to say that my own thinking has been shaped by my "right-wing" convictions rather than by any detached appeal to theory and evidence? Actually, it isn't. For starters "right wing" is hardly the right phrase for describing my convictions, such as they are, unless one thinks the expression applicable to someone who thinks, among other things, that carbon dating is more reliable than Genesis 1:1-5; that pregnant women are usually more fit than others to decide whether they should give birth or not; that the world would be less rather than more nasty were cocaine sold at Walgreens; and that the Patriot Act ought to be called the Scoundrel Act. In short, if you absolutely must label me, try "libertarian."

But the fact is that I'm not even much of a libertarian. In California back in 1979 I helped to get the Libertarian Party's Presidential candidate, Ed Clark, on the ballot. Since then, I've had nothing to do with politics, which I've come to regard as unseemly. That others can be enthusiastic about this or that politician surprises me in the same way that it might surprise me to learn that there is such a thing as an official streptococcus fan club with a list of dues-paying members. And although I can't claim never to have voted, I can at least say that I would hate to ever have to admit voting for any of the people I voted for. All things considered I'd much rather exercise what Herbert Spencer calls my "Right to Ignore the State."

Ideology admittedly played some part in the development of my views on money. But that part was much smaller than many may imagine. Back in 1980, when I was supposed to be working toward an M.S. in Marine Resource Economics at the University of Rhode Island, I instead spent my time either swimming at Charlestown Beach or reading books on monetary economics, the aim of the last having been that of understanding the double-digit inflation then in progress. I'd already read several dozen books on money when my former college chum Clint Bolick encouraged me to see what von Mises and Hayek, who I'd not yet heard of, had to say. So I read the Theory of Money and Credit, and it was as if someone had taken a broom and swept the cobwebs from inside my skull. Then I read Denationalisation of Money, and it was as if someone set off fireworks there. I wasn't instantly won over by Hayek's thesis. But that thesis got me seriously wondering whether the instability of the U.S. dollar might have its roots in government meddling with money.

That's when I first got involved with IHS. As I recall, they had placed a little ad in some libertarian magazine (yes, I read that sort of thing back then) offering summer grants for economics research. So I proposed to examine Hayek's thesis in light of U.S. experience (or was it the other way around?). Anyway, I got the grant and worked away at my essay and ended up discovering that getting the U.S. facts to fit Hayek's general hypothesis was easier than shooting fish in a barrel. It was while I was working on that project that Walter Grinder, IHS's long-time Academic Director, told me about Larry White's work, then still in progress, on the Scottish banking system. Of course I wrote to Larry and read his chapters as he sent them to me. Then I asked him to let me know as soon as he took a job offer, which is how we both ended up showing up at NYU at the same time. You know the rest.

So ideology pointed me in the direction that was to develop into my research program. But it did so, not by making me want to become an advocate for "libertarian" monetary ideas, but by equipping me with a working hypothesis that was long overdue for testing, and which seemed to me to survive such testing remarkably well, if not with flying colors. I dare say that any young professor finding himself armed with such a hypothesis would have done exactly what I did, which was to run with it as far as it would go. Naturally libertarian groups (but not genuinely "right wing" ones***) have found my research attractive, and have sometimes awarded me for it. But I didn't pursue it just to please them. Indeed I rather prefer having non-libertarians express interest in, if not agreement with, my ideas, because their interest is more likely to depend on the power of my arguments than on the propriety of my conclusions. It's hard, on the other hand, for me to really get a kick out of talking to hard-core libertarians since their way of thinking makes all my hard research seem like so much gimcrack ornament.

But even admitting this doesn't quite get to the bottom of the bearing of ideology upon my work. For after some years as an academic economist I came to think of ideology as an outright hindrance: one cannot, it seems to me, both subscribe to some preconceived "system" of beliefs (as opposed to assumptions that are merely tentative or working) and remain perfectly free to form beliefs of one's own. For that reason I long ago stopped describing myself as a libertarian economist or as an Austrian economist or as anything save a monetary economist or economist sans adjectif. More importantly I stopped thinking of myself as anything other than a plain-old economist or monetary economist, and so no longer concerned myself, if I ever did, with establishing my bona fides with anyone apart from other economists. If I reject or simply question arguments for government intervention in the monetary system, it's only because I don't find the arguments convincing or consistent with available evidence. It's not my fault that so many arguments for government intervention in money turn out to be nothing more than unfounded (though oft-repeated) assertions.

Finally, although I'm used to being called one, I don't even consider myself a "free banker," in the sense meaning an advocate of free banking. Of course I'd like to see a revival of the Scottish currency system, or something like it, because I'm convinced that such a revival would make most people, myself included, better off. But the prospect of changing the world wouldn't float my boat even if it weren't quite so teeny-weeny. What does turn me on, really and truly, is the feeling of having my hands on some truth no one else has yet managed to grab. I know that sounds corny, but I mean it. I think a lot of economists mean it. I just wish people wouldn't find it harder to believe when I say it than when some fan of the Fed does.
*Don't ask.
**Tyler Cowen, on the other hand, knows how to strike a hard bargain: although as Mercatus's General Director he is presumably on that Koch-sponsored institution's payroll, he nevertheless continues to hold out, even going so far as to defend the Fed against free bankers like myself. I do hope that the Koch Foundation will go ahead and give him the money he wants in return for changing sides. While they're at it, I hope they might also do something about all those monetary economists who are as yet in the Fed's pocket.
***I am still waiting for an invitation to speak at the Heritage Foundation, or the American Enterprise Institute, or the John Birch Society, or the Trilateralist Commission. Probably this post won't make the wait any shorter.

40 Responses to “My Part in the Great Right-Wing Conspiracy”

  1. avatar ScribblerG says:

    What a great post. I too have found ideology less and less interesting. At 51, i find people still worshiping at the Progressive or Conservative altar just strange. I also loathe politics and find voting silly, when 20 years ago I wouldn't miss it for the world. I used to call myself a libertarian, but don't anymore and have actually bailed on the libertarian party due their antics.

    I'm not an academic but did work in risk and trading systems for a while and essentially taught myself finance by reading many textbooks and other publications on the topics (and having the good fortune of working with some great minds). I did take three economics undergrad courses - not realizing my macro text book was by Heilbronner, who only admitted that the socialists lost the "calculation debate" in '89, 8 yrs after my macro course, and that was the extent of my economics education.

    In some ways, I think my self-directed inquiry has helped me tremendously as I had to internalize what I was studying rather than rely on someone else to explain it. I began to understand that finance was in some very real ways applied economics, and that risk management of large derivatives portfolios (I sold AIG their market risk mgmt system)was really as much about big macro economic drivers as it was esoteric statistical analyses.

    I always felt like something mysterious was going as I learned more. The "truth" seemed very evasive. It was only maybe 10 years ago that I started reading more free market economists and then stumbled upon Mises and Hayek, and had the same light-bulb moment. Suddenly what was going on actually made sense to me - for the first time.

    I too see little chance for any real change in our banking or monetary system, but I at least try. I was out with a Basel II compliance/implementation guy from a big bank the other night and talked to him about free banking - and he just kind of grinned at me and seemed to think it was nuts. It's amazing how the dogma of govt intervention as axiomatically required just doesn't get examined critically by most people working in the business.

    But I feel that I'm on to something closer to the "truth" than I was before. While I struggle to understand the economics sometimes and am a hopeless amateur, at the same time I do think there is something fundamentally better about this approach, so I try to share it when I can.

    I want to thank you for your commitment to the truth - your writing and speaking reeks of it. It's a huge help to many of us out here and even if you can't change the world, you should know that you've helped change my mind for sure. Thanks!! And oh yeah, I don't care who pays you.

  2. avatar olde reb says:

    I LOVE to read a reply piqued by an offensive remark that sullies the principles of the writer. It exposes more honesty, and knowledge, than a casual writing--and you handled it very well. Your rejection of the status quo is refreshing.

    After noting your academic standing, the real interest is your remark: “What does turn me on, really and truly, is the feeling of having my hands on some truth no one else has yet managed to grab.”

    May I suggest a radical analysis posted at http://www.scribd.com/doc/99860711/rip-off-by-the-fed-5-rtf or the short conclusion at http://www.scribd.com/doc/101937790/Federal-Reserve-Heist ??

    Perhaps the extrapolation that the Ponzi scheme Federal Reserve has been the funding of the New World Order may be too much even for you. Ref. http://therebel.org/blogs-sorted-by-most-hits/667714-funding-the-new-world-order

    Your reflections would be enjoyed.

    • avatar George Selgin says:

      Well yes, I'm afraid it is all rather too much even for me. I'm inclined to say of it and related conspiracy theories what Laplace is supposed to have responded when Napoleon asked why he omitted to mention any role for God in his account of the origins of the solar system, to wit, that he "had no need for that hypothesis." As for the specific claim that Goldman Sachs has been in the saddle all along, I find it rather difficult to square with this chart showing what's happened to Goldman's market capitalization since 2003.

      • avatar olde reb says:

        I submit that a chart of the capitalization of a company is not a reliable or informative document as to the impact and affect the company has had on the world economies. But there is nothing in your reply to suggest you even reviewed the article.

        • avatar George Selgin says:

          Admittedly it's just one picture. It doesn't suggest that Goldmans hasn't had a big influence (indeed, I think it has), but simply that even Goldmans itself might have been much better off under a more responsibly managed world financial system. The circumstances cast doubt on the suggestion that Goldmans was in control of the Fed and other major national and international monetary authorities.

      • avatar ScribblerG says:

        As a person who worked in the center of the banking, derivatives and global capital markets business for some time, I couldn't agree more. If you understand the institutional setting and incentives capital markets players are responding to, there is no need for an NWO or Bilderberg group to explain exactly what has happened and why.

        While I was not a banker, I did work with many senior bankers selling trading and risk systems and I can tell you that they were at least as moral as people I've met in other business settings, if not more so. They got fired regularly, blew up and lost money regularly, and also got paid richly when they made money for the bank. But universally, they all had to work very hard to keep their privileged positions. Some were arrogant and some were psychos, but I saw just as many in the tech/software firms I worked for and with.

        Even when I saw the guy who ran the FX dealing desk at AIG get up on a trading desk and scream "Eff 'em hit 'em again, hit 'em again" as they bought every pound the U.K. central bank would sell during the ERM meltdown in the early '90s, I didn't see anything illegal or even immoral happening. They knew they (and other market participants) had more capital, it was the Bank of England's fault - BoE lost 70 billion in 3 days being foolish in this wayt. Not too long after that a Bankers Trust trader cornered the NZDd market - but he did it straight up. Central banks like to pretend they are operating a free market, but when they lost control of them, suddenly it wasn't so sweet.

        Demonizing bankers and banks is childish and ignorant. Saddest thing? I've asked many such people if they want to actually know how say AIG went down, but they mostly don't even want to hear what I have to say, or lose interest in a few minutes when the explanation gets complicated - or when I realize they don't even understand the basics of finance and capital markets and try to explain the basics to them. But they sure spend a lot of time on Lew Rockwell's site...

        • avatar ScribblerG says:

          Oops, I realized upon reading my comment that I misstated the ERM meltdown. The Bank of England was buying, not selling. Just banged it out and didn't edit before posting, sorry folks.

        • avatar George Selgin says:

          If you refer to my "French king" remark (below), I distinctly remember the attribution being to some such--though I can't remember which. I thought it an unusually clever thing for a French king to have said, but there it is. As for Laplace, I refer to him above. But he wasn't the source of this quote.

  3. avatar olde reb says:

    the main item was directed to the Federal Reserve analysis. No comments ??

    • avatar George Selgin says:

      My previous remark was of course directed to the third link only. As for the others, well, OK, but only because you ask. I'm afraid that a glance at them sufficed to reveal many mistaken statements regarding (among other things) the nature of the Fed's money-creating operations, including (for instance) that the Fed ordinarily purchases securities directly from the Treasury (and that in doing so it credits the government's account and adds to the sum of FR notes outstanding); that it issues money only in exchange for U.S. government securities, that deficit spending is not possible without the Fed's cooperation, and that the Fed alone (but not the Treasury) profits from inflationary monetary policy. Some others, like the claim that the $700 billion in TARP money was given to the Fed, are even more egregiously wrong. (TARP money was used by the Treasury to purchase equity capital and some toxic assets directly from private-sector financial institutions.) As some wise French king is supposed to have said, if one starts with "facts" that are wrong, one is unlikely to come to right conclusions.

  4. avatar Gonzalo R. Moya V. says:

    @Olde Reb,I believe you are missing the point of a blog: One person writes, the others comment, not interview, test or interrogate.

    • avatar ScribblerG says:

      Indeed. I think he believes he has something to teach George, which is truly funny. I'm less polite than George, so I will say what must be said to Olde Reb. He's bought into vapid conspiracy theories that sidetrack much of the libertarian movement and he's a big part of the reason that libertarians are marginalized.

      Frankly, it's guys like him who ran me out of the libertarian party and movement. As you can see from my commentary above, I have worked in the field these silly people comment about, but they are just not interested in fact-based, non-conspiracy accounts. The funny part? Their analysis of the situation is in many ways Marxist, and they don't even know it. Some friends of liberty...

    • avatar olde reb says:

      I would have thought, when Mr. Selgin writes: “What does turn me on, really and truly, is the feeling of having my hands on some truth no one else has yet managed to grab. I know that sounds corny, but I mean it.” , I tend to accept that as an open invitation for an off-beat presentation.

      The analysis offered on how the Federal Reserve and the U.S. government create fiat money was received in a graduate course of Money and Banking at a flagship (SEC) state university. The professor who claimed to have had several years employment with the FRBNY went beyond the textbook presentation.

      No other feasible scenario of the sequence has been observed from the hallowed halls of academia. Nor has any other destination of the funds from the auctions of deficit spending Treasury securities except for the coffers of the (unknown) owners of the BOG. That money (a trillion dollars annually) would appear to be pure profit which by law would belong to the government. Concealment of the money would appear to be embezzlement. Main stream economists have not been found that address the conundrum.

      But I apologize for interfering with the agenda of the blog.

      • avatar George Selgin says:

        Apology unnecessary, olde reb. But (1) there's no secret about who nominally owns the Fed: the shareholders are the system member banks, who as such are entitled generally to a dividend equal to 6% of its net earnings; and (2) the rest of any surplus the Fed banks earn does go to the BofG, but only for it to pass on to the Treasury. All of these details are spelled-out in the Federal Reserve Act, particularly in Section 7 of that Act.

        • avatar olde reb says:

          As observed in the suggested writing, the 12 FR banks have claimed and been adjudicated to be private corporations as you confirm; shareholders own stock (of a sort) in the member banks (Title 12, sections 281-308). The FR has identified them as franchisees of the system. Supervisory and administrative control is vested in the BOG which can terminate any director of the FR banks without recourse.

          It is the ownership of the BOG that has never been adjudicated or confirmed (Title 12, sections 241-252). Various writers have alleged specific Wall Street bankers and other financial entities as owners but FOIA requests to the BOG for confirmation are ignored.

          Do you know who are the owners of the BOG?

          And to repeat myself, the nexus is the accounts of receipts and disbursements of the Treasury auction accounts, which are exclusively handled by the FRBNY and have NEVER been audited by an external accounting firm nor the GAO nor have they been included in any report to Congress. It is alleged they conceal profits of the FR system. The audits of the FR included in the Annual Report to Congress are conducted in accordance with guidelines established by the BOG. The above accounts are excluded from the audit that is authorized. Perhaps you know of some exception to this statement.

          As you say, Section 7, paragraphs 1 and 2, of the 1913 FR legislation specify: “(A)ll the net earnings (of the Federal Reserve system) shall be paid to the United States as a franchise tax...(and) be applied to the reduction of the outstanding bonded indebtedness of the United States...” If the auction funds from the sale of deficit spending securities went to the government (as do the funds from securities sold to roll-over prior securities), there would be no inflation nor would the securities result in an increase in the national debt (inflation). Where does the money from the deficit spending securities go ?

          Respectfully submitted. Reb

  5. avatar BruceMajors says:

    Maybe you should write comedy too. I think your recent Cato presentation also had some comic elements.

  6. avatar BillWoolsey says:

    Great biographical note.

    Yesterday, I was teaching a Gorton article, and we also watched Bernanke's lecture on the crisis. Both claimed that the reason for the shadow banking system is that large depositors are not insured. While the use of banks by large depositors before the existence of deposit insurance casts doubt on that, as does the market for large certificates of deposits since the creation of deposit insurance. Still, being a politician myself, I can testify that my Town's demand deposit in our bank must be 100% secured by collateral. That is not our doing, but rather due to some regulation, I believe at the state level. Are other institutions required to have deposits insured or matched by collateral? Is choosing a well-capitalized bank really not an option? That banks are charged for deposit insurance based upon total deposits, insured or not, can hardly help them keep uninsured deposits.

    My view has always been that the motivation for "deposits" in the shadow banking system was marginally higher yields, not the greater "safety" of collateral that is the AAA tranches of securitized loans.

    Why not insure all bank deposits if the alternative is to have government insure repurchase agreements funding securitized loans. I can understand why people who are involved in the shadow banking system would prefer that to a return to standard banking. But what is the benefit to the rest of us? Of course, Gorton's proposal that competition be restricted in shadow banking to give charters to institutions permitted to do it (securitize loans and fund them with repurchase agreements,) would also be attractive to those in the business. At least, if the charters were given to them for free.

    Still, I remain puzzled as to why the "deposits" in the shadow banking system lacked any option clause.

  7. avatar Floccina says:

    Hey I graduated from URI in 1980 from the college of resource development and my area of interest was Resource Economics. I mainly spent my time down near Sand Hill cove and Galilee. That was great place to go to school with all those beach houses available for cheap off season rental to students.

    • avatar Floccina says:

      Also on topic, I now refuse to label myself and let others freely label me. It seems that fascism Libertarianism, Socialism, Communism etc. are in the eye of the beholder. Some call me a right wing conservative others a Libertarian while a few radical Libertarians might call me a socialist. Those broad definitions do not matter. Better to discuss real issues independently. I think that the state taxes much more than it should because most SS and medicare goes to people who do not need it and defense spending is much higher than it need be but that a basic income guarantee is worth a try. To some that makes me a right winger to others it makes me a socialist or redistribution.

      It is interesting how few believers in economic freedom are Keynesians and how few economic freedom skeptics are not Keynesians because one could be a string pro market person and see a need for Gov stimulus and vice versa.

      • avatar ScribblerG says:

        Despite the fact that people misuse words, that does not render them meaningless. Socialism has two definitions, one a broader sense of the role of govt as being responsible for improving society, and the other being a substitute for free markets in which the "use value" of goods is the basis of production, and economic planning replaces the information system of prices, property and profits, with the goal everyone is pursuing being profit.

        So, people can call you whatever they want, but that doesn't mean it's so. I can call a banana an orange, but that makes me incorrect, not the banana an orange. Your last comment about income guarantees is something one sees in social democracies, and is best seen as a "socialistic" idea, in that it's placing govt in the role of determining an allocation of some wealth to people, ultimately on an arbitrary basis.

        As for the view of Keynesians, the term is somewhat imprecise as well. Free marketeers may support govt stimulus as a "stabilizer" in extraordinary circumstances - see Milton Friedman and other monetarists in the free market tradition. People like me simply believe that the govt has no wealth, and when it does "stimulus" it's either redistributing or borrowing wealth - but isn't creating any wealth, so why bother?

        Not to be a jerk, but these beliefs are more precise than you seem to be aware of. Hope this is seen as constructive.

  8. avatar Jim says:

    my cobweb to firework moment came after figuring out the Fed (via RP) and then reading LRC introducing me to Rockwell. When the dust settled I still thought it was too "right wing" for 100% reserves until I stumbled across you and your perfect argument for free fractional reserve banking and coolly explaining how the US never really had a free banking era, and that it was heavily consolidated in NYC post civil war. then the anti-war tangent came about from that and before you know it my mind went from statist to An-Cap in 5 years. but i can tell you that 5 years ago the Kock/Cato connection sounded awful to me, now see it as a unintended consequence to good intentions. maybe some public choice theory in reverse? i don't know. anyways the free market argument always sounds better from the bottom up (someone that speaks the truth and obviously isn't connected to DC, you like RP) and admire your (1st) principles as it's obviously cost you personally and professionally. the truth always wins out over time.


    • avatar ScribblerG says:

      Hi Jim - At the risk of being inflammatory, how do you view Lew Rockwell and Ron Paul now? Did you research the PaleoLibertarian movement, in particular it's overtly bigoted messaging, alliances and strategy and Paul's, Rothbard's and Rockwell's central involvement in it?

      I ask because I run into so many seemingly sensible people in the libertarian community who seem unable to process the well documented facts about what these guys did and have never taken responsibility for. I also ask because I believe that following principles demands that moral libertarians distance themselves from these guys as any kind of legitimate political voice.

      Don't bother arguing the facts, they are not in their favor or in dispute regarding the PaleoLibertarian movement. I just wonder if you know what they are, and if so, if you have subsequently recognized the immoral and ultimately illiberal nature of their actions in this regard? Fyi, in case you don't know, this is why Ron Paul is permanently unelectable. And why many intellectuals in the libertarian movement won't touch Rockwell (and the LVMI Lew Rockwell legitimization campaign.

      • avatar Jim says:

        well he was never really running for office to win, just using the debate stage to flip kids like me (36) against the state. and when you do it for 30+ years you pick up some (right wing) baggage and some hanger-ons that write bad stuff. simply tune it out. to all the other cosmos out there that criticize i say to get in the ring. politics is disgusting but we (people who don't read Mises and Hayek while sunning on the beach) were not given a 3rd option until he showed up on the debate stage, to basically sabotage the coronation process. and he does it (again flip your mindset) by taking on the tough subjects discussed here (the Fed) and war and how they are connected, and the real touchy one of Lincoln and the civil war. whether you want to hear it or not, attacking Lincoln is the best way to get someone to intellectually grab the state by the throat. and in the process you look like a raging racist to the mainstream eyes but who is trying to convince them? It's libertarian light people on the sideline like Cato, GMU, Reason, etc. why? b/c they want a seat at the table of power (or an article or tv appearance). look no further than Greenspan, Friedman (who i grew up watching on PBS).

        to summarize, he (and Lew) are a good gateway (biting mainstream bullets) and now i read Selgin and Caplan and Tabarrok to refine my argument. call it the division of labor/knowledge at work.

        • avatar ScribblerG says:

          So, you can't answer a straight question, got it. I have no problem with criticism of Lincoln, I have no idea why you would inject that. But of course, like most RP/LRC followers. you probably don't know that Madison went on record against secession and discussed the national nature of our quasi-republic 40 years before Lincoln was elected. So if you want to have a discussion about the actual history, not the selective history of New Confederacy types, I'm good to go. Perhaps it's already starting to occur to you that these guys are only telling you the parts of the story that support their narrative...

          As for the supposed good Ron Paul is doing for the liberty movement, yeah, keep on kidding yourself. His past and his associations with conspiracy theorists (truthers, illuminati and bilderberg dingbats), new confederacy types and outright racists has marginalized the libertarian movement - he's why we've never been able to get real support, not even during the recent election when many people polled as very friendly to libertarian issues. I know this may shock you, but the libertarian movement had a history that many people are aware of before you woke up and that history colors its perception in our political system. Paul, Rockwell and Rothbard tarnished it with their bigoted nastiness. You can pretend that all politicians get dirtied up etc, blah blah blah - it's nonsense. They did something awful. Period. And none of them have ever been straight up about it.

          But let's give you one more chance to demonstrate you are not an apologist for despicable bigots. Do you know what the PaleoLibertarian movement stood for and attempted to do as a political strategy? If not, just do some googling and you'll be embarrassed you ever flacked for Paul - no matter what he 'stands for' now (he has monetized his standing with libertarians but never delivered a speck of liberty, just in case you didn't notice).

          Assuming that you are in possession of the facts now - can you really back Ron Paul? Or not see Lew Rockwell as a person not fit for polite company? Yes, or no - no hyperbole, just an answer to a direct question. Fyi, I'm trying to wake you up to reality, hint, hint. Until you and many like you do wake up, we are destined to be a tiny minority of the political system.

          Last? Mises and Hayek rejected anarchy utterly, and the anarchists in the libertarian movement are at least as big a problem as the history of the PaleoLibertarian movement. Whatever you do, don't bother to try and sort me out - it's you and those like you who need to wake up and starting thinking much more clearly.

          • avatar Jim says:

            i really don't know or care about the paleo stuff, i like my morning oatmeal just fine.

            to be putting politics and liberty in the same sentence means you don't understand liberty. the state is a theology, politics serves as it's religion, democracy as it's form of prayer, and these politicians run around as preachers telling the masses what they want to hear. To think you can sell a freedom agenda in free lunch, all you can eat buffet, is delusional. but its so powerful it's kept you clinging to hope that politics serves as a path for freedom. but we will agree to disagree on that one.

            but to use that circus platform against itself to go plumb line libertarianism was an awesome tactic. and Hayek's greatest regret was not getting back up on the stage and taking on Keynes after General Theory. get in the ring, then criticize.

          • avatar ScribblerG says:

            @ Jim - So, you do support bigots, got it. What does that make you? Did you skip the liberal part of being a libertarian, you know, all of us being equal in our rights?

            As for your assertions about the nature of liberty and politics, I guess you have read some Spooner and Rothbard, but I wonder, do you really even understand the underlying principles they rely on to make the claims they do? I'm certain you don't.

            They are relying on emergent properties in society that will automagically result in liberty emerging as a state of societal existence when in fact there is no basis for making that claim. I have spent a bit of time in the field of complexity science and agent based modeling of complex systems. What's very clear is that small changes in initial conditions will yield wildly different outcomes. In fact, proper understanding of the nature of complex systems like human society makes clear the only thing an anarchist can ever claim accurately is that in an anarchic society, you might be free some of the time. That's it. That you and so many others in this movement don't even understand the probabalistic nature predicting outcomes from complex systems makes you joke to people who study complexity - and most anarchists don't know a thing about complexity science - yet their entire belief system rests upon it's shoulders.

            Worse yet, the historical record shows government with monopoly use of force as an emergent property that arises again and again. Anarchists ignore vast swaths of human history, as well as the benefits such institutional setups have conferred on humanity in service to a Utopian vision that has no serious basis in theory or practical experience.

            You should read Hayek and Mises on anarchy, fyi - but hey, I guess you know better than they, giggling.

            We are done here. My sense of your sophomoric grasp of the issues at hand was spot on. I see guys like you all the time in the libertarian space. Arrogant, and utterly ignorant of the ideas they throw around so glibly. Know this - you and your ilk have destroyed the libertarian movement. I know, you think you have some special knowledge I don't possess. If it wasn't so damaging to the libertarian movement, it would just be funny.

  9. avatar reardon says:

    Dr. Selgin,
    I wanted to say thanks for the post. Very well said and I can relate to your random journey of finding an area of interest and search for truth. It describes my educational experiences and my professional career in many ways.
    In graduate school at GMU, your book was the first one I read outside of the curriculum of study, and it set me on the path to studying financial systems. I read all the books and papers by you and Dr. White. Best decision I ever made in grad school.
    What I appreciated the most from your post was your perspective on truth and ideology. It look me a while to realize it. It's amazing how liberating it is to let go of strict ideology and instead focus on finding answers to questions. I remember one professor put it like this: he told us that we are "ians"...just put that at the end of your last name...that's your affiliation...I'm going to give you the toolbox for how to be a good economist...now go search for the truth in the manner that suits you best.
    I appreciate the work you're doing. Keep it up.

  10. avatar ShaneCRoach says:

    I guess I'll be the lone voice in the wilderness here. It is as if you unloaded a double barreled shotgun on your left testicle thinking it would help you conceive a child. The Republican policies people are complaining about when they complain about their attitude towards large corporate interests are not the ones having to do with Republicans denying the Biblical role of charity, redistributing land in probably the most wildly progressive economic scheme ever devised, or banning all usury. The part they are complaining about he the Libertarian wing of the Republican party that keeps arguing that deregulating massive mega-corporations makes them behave more humanely.

    You're a Libertarian. THAT'S what they're complaining about.

    • avatar George Selgin says:

      Not sure I get this. But I am sure on the other hand that on balance more "regulation," far from serving to curb mega-corporations, tends to favor them over their smaller rivals, partly because the latter are less able to bear the cost, but mainly because the larger firms are the ones that end up shaping the regulations and getting in bed with the regulators.

      As for me, when I think "financial regulation," I find it easy enough to avoid envisioning a bunch of white-robed regulators sporting halos. Instead, I make a point of letting my mind's eye paint for me a picture of Chris Dodd being handed a VIP loan from Countrywide. Works every time.

      • avatar olde reb says:

        But who is it that writes the bills that somehow shelter the mega-banks from government inspection and control ?? ANSWER: it is the mega-banks. They wrote the FR legislation of 1913. They wrote the bill that (supposedly) excluded the Fed from a comprehensive audit . The banking lobby is huge.

        Can we agree that it is not the regulation that is the problem but it is the source of the regulation itself? Legislators receive campaign contributions for passing favorable legislation. Maybe limiting campaign contributions and perks would be a start.

        To beat an old drum again, the accounting records of the auctions of Treasury securities are handled exclusively by the FRBNY. They handled $8.4 trillion in 2010 of which $1.4 trillion was for deficit spending and $8 trillion was for roll-over securities issued in prior years. The $8 t was credited to the government and did not increase the national debt nor did it increase the reserves of commercial banks (result in inflation). The $1.4 t was not paid to the government because it increased the national debt and it resulted in inflation (an increase in money in circulation). The auction accounts are not included in the Annual Report to Congress nor have the receipts and disbursements ever been audited in the past 100 years. Any audit of the FR system is conducted according to guidelines established by the BOG and those accounts are not subject to review. Where did the $1.4 trillion go?

    • avatar ScribblerG says:

      George - I don't know how you do it.
      @Shane - So, your assessment is that the problems in our economy are due to not reigning in "corporate interests" or due to "deregulating mega-corporations"?

      What a penetrating and trenchant analysis. I have one question. Did you think you were on DailyKos or Mother Jones or something where that kind of empty and baseless hyperbole flies without serous scrutiny? Please, cite some data. If you are talking strictly about the regulation of banks, well then this site is a treasure trove of data that proves regulating banking is a rubes game, and only creates cronyist opportunities that you seem incensed by in the first place, in addition to causing the instability of the kind that occurred in '08. If you are talking about broader corporate regulation, I guess you don't actually have any idea of the state of business regulation in this country across local, state and federal authorities. To call it deregulation is the opposite of what's happened on net. Start by looking at the growth of the federal register...

      But we have succeeded in pushing back the planners in some industries like telecommunications and transportation in meaningful ways that show startlingly positive and obviously beneficial results to society, perhaps you missed it while reading Lukacs and Kropotkin? That always connected, internet enabled smartphone in your pocket which you pay chump change for or that $139 dollar flt from New York to West Palm you just jumped on - safer than ever, despite the bleating of statists - only exist because of that awful deregulation you seem to be worked up about.

      Last, why the silly soundbite about the bible demanding socialism? Do you think this a Breitbart? George and his fellow economists present fact based analysis and also theorize on sound bases here, and are wide open to real argument. I haven't seen anyone cite the bible for anything ever here - but I guess that is just part of your standard schtick. Do yourself a favor, go back to HuffPo if this is the best you've got. You're not intellectually up to the kind of dialog going on here.

      • avatar ShaneCRoach says:

        I'm sorry, but my reply is way more basic than all of this. The post seems to be an attempt to distance himself from the "right wing", which he does in part by mocking Christian beliefs about the creation of the universe - a topic so far from apropos to the subject of banking I can just barely believe he felt inclined to toss it in there. I am merely pointing out that aligning himself with libertarians, the only two of which anyone is familiar with are both right wing Republicans, is a rather absurd way of trying to distance one's self from the right wing.

        I'd deregulate farther than any of you would dare, I imagine. I'd do away with limited liability protections, intellectual property protections, and have the government entirely out of the business of enforcing any contract that has anything to do with usury.

        Fairly difficult to have a debt based monetary system if no one is going to threaten your deadbeats for not paying you back at interest. Someone doesn't pay you back, don't loan any more money to them. Perfect deregulation.

        Better be damned sure you do not circulate lies about who has or has not paid their debts though.

        P.S. The Bible does not demand socialism. It presents an ideology that prevents the monopolization of real estate, hence ensuring that natural resources cannot be hoarded by a handful of powerful people. I don't so much present it as a model for modern emulation as an example of how far ahead of its time this sort of thinking still is.

        • avatar George Selgin says:

          ShaneCRoach, I certainly did not intend to "mock" Christian beliefs, or "right wing" ones for that matter. I merely pointed out, in response to critics who have labelled me a right-wing conspirator, some more obvious examples of how my own beliefs diverge from what are usually considered "right wing" ones. This isn't a matter of strategy but simply of self-description: I would hope that no-one would find my views on monetary economics a whit more or less persuasive on account of my other beliefs. The relevance of my observation to the theme of the post ought to be self-evident, given its title, though (as I believe I make clear) the main issue is not whether I am or am not a "right winger" but whether or not my ideas are bought and paid for by others.

          Finally, I understand that my personal beliefs are also not those of many self-styled "libertarians," and am for that reason also far from being entirely comfortable with that designation.

          • avatar ShaneCRoach says:

            My response is aimed at the fact that it does you no good to defend yourself from attacks that your thinking is related to unpopular conservative notions when you align yourself with conservative notions.

            Fundamentally, people who are concerned about deregulation and relate it to conservatives are asking you to defend your SYSTEM of deregulation. Instead, you offer up a mish mash of personal values that do not come anywhere close really to separating you intellectually or philosophically from conservatives.

            I just found it funny is all, thus the relatively content free nature of my response. I couldn't resist the snarky remark, and I know I should have... Sorry.

            I just can't imagine how you thought it would do you good to separate yourself from conservative thought as it pertains to deregulation by associating yourself with that faction of the modern conservative movement most feared by moderate to liberal "regulationists" or whatever you want to call them - the ones who seem to think the invisible hand will magically take care of everything if you just do away with enough regulations.

            At the end of the day, you are going to have to describe exactly how you want this free banking system regulated, because banking in and of itself requires regulation in order to exist at all. It's not at all a "state of nature" sort of institution.

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