Once, while a good friend was visiting me on a particularly cold winter's night, the temperature in the poorly uninsulated living room of my old Victorian house dropped to a distinctly chilly 62 degrees. "Can't you make it any warmer?" she asked? "I'm afraid I can't," I said; "the thermostat's already on 68." "Try setting it at 80," she replied.
I didn't indulge her (well, not that way). But I wonder whether those economists who have been calling for a higher inflation target would have.
There are, I'm sure, some parts of the Scottish National party's recent blueprint for an independent Scotland to which the British government might reasonably take umbrage. But the plan's call for Scotland's continued use of the pound sterling, which has drawn the most criticism, isn't one of them.
The pound sterling has been Scotland's monetary unit since 1707, when the Act of Union led to its adoption in place of the Pound Scots. Scotland's actual paper currency, on the other hand, has mainly consisted of sterling-denominated notes supplied by several of its own commercial banks. The nationalists' proposal is therefore largely (though not entirely) a call for adhering to the status quo, and a rejection of the alternatives of either adopting the Euro or having Scotland once again establish an independent monetary standard.
How has such a seemingly reasonable and innocuous plan managed to ruffle Parliament's feathers? According to The New York Times, the British government
says it is unlikely to agree to share the pound with an independent Scotland, citing the problems experienced by the 17-nation euro zone to illustrate the dangers of a common currency without political union. London says it would be difficult to have the Bank of England act as guarantor of the pound if Scotland had a different fiscal policy from Britain, for example. Nationalists hint that if Scotland cannot keep the pound, it will not accept its share of Britain’s debt.
Now I've no dog in the fight over Scottish independence, but it seems to me that the folks who are saying this hae git thair bums oot the windae. For starters, an independent Scotland would hardly need the British government's permission to go on using the pound sterling: it's hard to imagine how the U.K.-sans-Scotland could prevent Scottish citizens and banks from continuing to use the pound without resort to such Draconian legislation as would make U.S. money-laundering laws seem toothless in comparison. In both England and Scotland today, for example, it's perfectly legal for banks to offer foreign currency demand deposit accounts, not to mention other sorts of foreign currency services. Just how would a truncated British government contrive to prevent, and to justify preventing, an independent Scotland from continuing to enjoy the right to offer such services, while adding the pound sterling to the list of "foreign" currencies to which the right pertains?
If the Brits were really willing to play hardball, I suppose they could try placing an embargo on shipments of Bank of England currency to Scotland, like the one the U.S. imposed, as part of its effort to topple Manuel Noriega's government, on shipments of fresh Federal Reserve notes to Panama. But whereas Federal Reserve notes had long been the only form of paper currency known in Panama's dollarized economy, the Scots, as I've already observed, have long managed without Bank of England notes, and could easily continue doing so, especially once freed from British-imposed banking regulations. Settlements and redemptions of Scottish bank balances would presumably have to be done using London funds. But unless the Brits wanted to impose severe exchange controls, which besides being embarrassing would harm English citizens no less than Scottish ones, that option would pose no great difficulty.
And the Eurozone comparison? A load of mince! The reason the Eurozone is a mess is because the Euro isn't the German mark--that is, because it's a multinational currency supplied through a multinational central bank, rather than a national currency that happens to be employed by several nations. Creditors to profligate Eurozone nations, or to irresponsible Eurozone banks, have therefore had reason to hope that the ECB might ultimately come to their aid, and especially so since the Growth and Stability Pact became a dead letter in 2003. Creditors to dollarized countries, on the other hand, have no reason to count on Fed bailouts. Were either Ecuador or El Salvador unable to service its debt, or were a Panamanian bank teetering at the brink of insolvency, it would be of no concern to the Fed, or the FDIC, or any other U.S. government agency. Dollarized or not, Ecuador, El Salvador and Panama have to manage on their own.
If the experience of dollarized countries can be relied upon, Scotland, besides not needing England's permission to go on using the British pound, would be better off not having such permission. It stands to benefit, in other words, by steering clear of any formal arrangements that might appear to make the Bank of England, or any other non-Scottish authority, responsible in any way for the safety and soundness of Scottish bank liabilities or government securities. Let the Scots follow the example of Ecuador and El Salvador, and "poundize" unilaterally. If the British Parliament refuses to cooperate, so much the better. Who knows: Scotland could even end up with a banking system as good as the one it had before 1845, when Parliament, which knew almost as little about currency then as it does now, began to bugger it up.
Concerning Mike Sproul’s guest post on the “backing” theory of money, also known as the present-day real bills doctrine, some readers may appreciate more background, which I provide in bare-bones form here. There is more than one version of the real bills idea. Adam Smith famously wrote these words in book II, chapter 2 of the Wealth of Nations:
What a bank can with propriety advance to a merchant or undertaker of any kind, is not, either the whole capital with which he trades, or even any considerable part of that capital; but that part of it only, which he would otherwise be obliged to keep by him unemployed, and in ready money for answering occasional demands. If the paper money which the bank advances never exceeds this value, it can never exceed the value of the gold and silver, which would necessarily circulate in the country if there was no paper money; it can never exceed the quantity which the circulation of the country can easily absorb and employ.
When a bank discounts to a merchant a real bill of exchange [emphasis added] drawn by a real creditor upon a real debtor, and which, as soon as it becomes due, is really paid by that debtor; it only advances to him a part of the value which he would otherwise be obliged to keep by him unemployed, and in ready money for answering occasional demands. The payment of the bill, when it becomes due, replaces to the bank the value of what it had advanced, together with the interest. The coffers of the bank, so far as its dealings are confined to such customers, resemble a water pond, from which, though a stream is continually running out, yet another is continually running in, fully equal to that which runs out; so that, without any further care or attention, the pond keeps always equally, or very near equally full. Little or no expence can ever be necessary for replenishing the coffers of such a bank.
The University of Chicago economist Lloyd Mints criticized a number of versions of the real bills doctrine in A History of Banking Theory in Great Britain and the United States (1945), a book well known at least among economists interested in monetary thought. (For an online treatment that draws in part from Mints, see this article by Thomas Humphrey of the Federal Reserve Bank of Richmond.)
It seemed as if Mints had buried the real bills doctrine. In 1982, though, there appeared an article by Thomas Sargent and Neil Wallace called “The Real-Bills Doctrine versus the Quantity Theory: A Reconsideration.” Their article spurred much debate and imitation. In a reply article (requires subscription to see the whole thing), the Canadian monetary economist David Laidler criticized Sargent and Wallace for implying a continuity of their views with older views that Laidler argued was not the case—terming their view the real bills doctrine was a misnomer, he claimed.
Mike Sproul has been thinking about the issues involved for a long time now. He has material on his Web site about the real bills doctrine, which he did not mention in his post but I believe has cited in some comments he has made on old posts on this site.
This is an extensive throat clearing preliminary to getting into my questions and comments, to which Mike will reply when he has the time.
Question: Mike, to give me and other readers a better sense of where you fit in the long real bills tradition, please explain (a) whether the real bills doctrine as you define it is similar to the way Sargent and Wallace define it and (b)whether you think it was a misnomer for Sargent and Wallace to call their idea a version of the real bills doctrine.
Question: Is the real bills doctrine as you define it a theory that is as generally applicable as the quantity theory claims to be, or is it a theory that applies to some kinds of monetary institutions and circumstances and not to others? (See my comment just below for a clarification.)
Comment: In wartime many occupying armies have issued a kind of currency, usually forced into circulation at par with the existing currency on the official market. The aim of this currency was frankly to enable the occupier an easy means to commandeer goods. The currency was not readily exchangeable into any foreign currency, including the home currency of the occupying army, and there were no reserve assets of recognized international value held against it. Does the real bills doctrine as you define it apply to analysis of these currencies, or is it confined to more normal historical cases?
Comment: To me, saying that acceptance of currency for tax payments provides a kind of backing is metaphorical rather than literal. When I think of backing I think of convertibility at a set rate of exchange. A currency that is supposedly backed by certain assets but cannot be exchanged for any of them at a set rate is not backed in the way I believe most people think of the term, or in the way that issuers backed their currencies under most types of gold standard.
Comment: In your example of the playing card money, the retort from the quantity theory side is that inflation does not occur when the money supply triples because the velocity of money (inversely related to the demand to hold money) changes. Other things are not equal, in other words.
Comment: In the 1990s I heard this aphorism about central banks in poorer countries (which, remember, had had a terrible decade from 1982-1992): “The assets are garbage; the liabilities, everyone believes in.” For a floating currency during normal, noncrisis periods, as long as the central bank’s liabilities are limited in quantity, I don’t see what difference it makes whether the assets are Swiss government bonds or dodgy loans purchased from domestic banks. During a crisis it matters, because Swiss government bonds are easy to sell in quantity without having to offer fire-sale discounts and dodgy domestic loans are not. If backing matters so much, though, shouldn't we see less marked a difference between crisis and noncrisis periods in the value of the currency, since the assets on the day before the crisis and the assets the day the crisis begins are the same?
As I mentioned in a recent post, online discussions do not necessarily change the minds of the participants, nor should they, necessarily. I do think, however, that we can clarify some of the issues involved in the topic, and I look forward to Mike's reply. I have also invited Mike, if he wishes, to summarize the main points raised in the comments on his first post and to offer his replies, separately from what he may have to say about this post.
I must say I'm puzzled and frustrated by the many clueless responses, like this one by Dallas Fed President Richard Fisher, to those well-placed (mostly Keynesian) economists who have been insisting for some time that, with the unemployment rate still above 7%, and the latest (annual) inflation rate at just 1%, what the U.S. economy needs right now is a higher inflation target. Instead of 2%, they say, make it 4%, or even 6%. Those higher targets, they explain, can be be counted on to raise interest rates, rescuing us from the zero lower interest rate bound we've been stuck near, and thereby getting the unemployment rate back down to the Fed's current goal of 6.5%, if not lower.
Should we take their advice? Heck, yeah! After all, this isn't the first time that we've been in a situation like the present one. There was at least one other occasion when the U.S. economy, having been humming along nicely with the inflation rate of 2% and an unemployment rate between 5% and 6%, slid into a recession. Eventually the unemployment rate was 7%, the inflation rate was only 1%, and the federal funds rate was within a percentage point of the zero lower bound. Fortunately for the American public, some well-placed (mostly Keynesian) economists came to the rescue, by arguing that the way to get unemployment back down was to aim for a higher inflation rate: a rate of about 4% a year, they figured, should suffice to get the unemployment rate down to 4%--a much lower rate than anyone dares to hope for today.
I'm puzzled and frustrated because, that time around, the Fed took the experts' advice and it worked like a charm. The federal funds rate quickly achieved lift-off (within a year it had risen almost 100 basis points, from 1.17% to 2.15%). Before you could say "investment multiplier" the inflation and unemployment numbers were improving steadily. Within a few years inflation had reached 4%, and unemployment had declined to 4%--just as those (mostly Keynesian) experts had predicted.
So why are these crazy inflation hawks trying to prevent us from resorting again to a policy that worked such wonders in the past? Do they just love seeing all those millions of workers without jobs? Or is it simply that they don't care about jobs at all, just so long as inflation is low? Whatever the reason, they certainly come across like a bunch of callous dunderheads.
Oh: I forgot to say what past recession I've been referring to. It was the recession of 1960-61. The desired numbers were achieved by 1967. I can't remember exactly what happened after that, though I'm sure it all went exactly as those clever theorists intended.
P.S.: I can already imagine Ken Rogoff's response to this post. Something to the effect, no doubt, of "This time is different."
P.P.S. (November 20): Of course it is different this time--but not, I submit, in ways that clearly favor the doves. One particular difference that comes to mind is that, whereas in the 60s policymakers (implicitly) gambled that an increase in the actual rate of inflation would not lead to a corresponding increase in the expected rate (and, hence, in the rate of upward or leftward movement of short run aggregate and labor supply schedules), those calling for a 4-6% inflation target today actually see it as a means for achieving a like increase in expected inflation, and so are (implicitly) gambling that such an increase in expected inflation will not result in any corresponding increase in the rate of upward or leftward movement of short-run aggregate and labor supply schedules.
I leave it to my readers to decide for themselves whether the new wager is more or less rash than the old one.
President Kennedy was not assassinated for being anti-Fed. I don't know how much more clearly that can be said. His death on November 22nd, 1963 was a sad tragedy, but it had nothing to do with any stupid and baseless Executive Order silver certificate conspiracy.
The Library of Congress' Congressional Research Service dispelled this nonsense in a 1996 report, "Money and the Federal Reserve System: Myth and Reality" (CRS Report for Congress, No. 96-672 E) by G. Thomas Woodward. Explains Woodward about the EO 11110:
The notion that Federal Reserve Notes are especially harmful has given rise to one particular conspiracy theory relating to an executive order in 1963. According to author Jim Mars, Executive Order 11110 issued by President Kennedy on June 4, 1963 authorized the issuance of $4,292,893,815 in United States Notes. Mars further asserts that after President Kennedy's assassination, the order was never carried out.
The claim is not borne out by the facts. First, E.O. 11110 had nothing to do with United States Notes, and did not affect any section of law referring to them. Second, E.O. 11110 did not anywhere mention any quantity of money; wherever the $4 billion-plus figure came from, it was not E.O. 11110. Third, The President had no authority to issue such an edict. Even utilizing the provisions of the Agricultural Adjustment Act of 1933, the most the President could issue without statutory authorization was $3 billion.
What E.O. 11110 did was to modify previous Executive Order 10289, delegating to the Secretary of the Treasury various powers of the President. To these delegated powers, E.O. 11110 added the power to alter the supply of Silver Certificates in circulation. Executive Order 11110, therefore, did not create any new authority for the Treasury to issue notes; it only affected who could give the order, the Secretary or the President.
The reason for the move was that the President had just signed legislation repealing the Silver Purchase Act. With this repeal, the Treasury Secretary could no longer control the issue of Silver Certificates on his own authority. However, the issuance of certificates could be controlled under the President's authority. Hence, for administrative convenience, President Kennedy issued Executive Order 11110.
Ironically, the purpose of the order and the legislation was to decrease the circulation of Silver Certificates, with Federal Reserve Notes taking their place. As economic activity grew and prices rose in the 1950s and early 1960s, the need for small-denomination currency grew at the same time that the price of silver increased. The Treasury required silver for the increasing number of Silver Certificates and coins needed for transactions. But the price of silver was rapidly approaching the point that the silver in the coins and in reserve for the certificates was worth more than the face value of the money.
To conserve on the silver needs of the Treasury, President Kennedy requested legislation needed to bring the issuance of Silver Certificates to an end and to authorize the Fed to issue small denomination notes (which it could not at that time). The Fed began issuing small denomination notes almost immediately after the legislation was passed. And in October 1964, the Treasury ceased issuing Silver Certificates altogether. If anything, E.O. 11110 enhanced Federal Reserve power and did not in any way reduce it [emphasis added].
Of course, the baseless conspiracy mongers attracted to this silliness argue that the Congressional Research Service "issues unjustified opinions" all the time (so some have laughable argued with me on Facebook, etc.--no, CRS has never issued an "opinion" in its history). Since the conspiracy nuts are congenitally opposed to believing any "establishment" sources, I'll offer two more they should consider to put this craziness to rest.
If you look at a copy of EO 11110 you will find that it does not order the issuance of Silver Certificates. It orders an amendment to EO 10289 . . . Those functions did not include the power to issue Silver Certificates. The purpose of EO 11110 was to add that power to the list . . . EO 11110 did not order the printing of Silver Certificates. It ordered the amendment of a previous executive order so that the United States Code would authorize or "empower" the Secretary of the Treasury to issue Silver Certificates if the occasion should arise . . .
Let's put this issue into perspective. The proponents of the JFK Myth assert that Kennedy was assassinated because he was about to issue Silver Certificates, thereby denying the bankers their customary interest payments on the nation's currency. However, the reality was just the opposite. Previously, the President could have issued Silver Certificates on his own authority; but, with the signing of EO 11110, he delegated that authority to the Secretary of the Treasury. At that time, the Secretary of the Treasury was Douglas Dillon from a well-known and powerful banking family. That means Kennedy surrendered the power to issue Silver Certificates and gave it to a member of the banking fraternity who could do with it as he pleased "without the approval, ratification, or other action of the President." Dillon, of course, would have strong motive to preserve the dominance of Federal Reserve Notes. The theory that Kennedy was getting ready to issue Silver Certificates is without evidence or logic.
Griffin takes the CCLI to task for making up additional baseless bs, "The Christian Common Law Institute has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superseded by any subsequent Executive Order. In simple terms, it is still valid." To which he replies:
This is not supported by the facts. The power granted to the Secretary of Treasury to issue Silver Certificates was rescinded on September 9, 1987, by Executive Order 12608, signed by President Reagan. The official purpose of the Order was stated as "Elimination of unnecessary Executive orders and technical amendments to others." It did not affect EO 11110 directly but did affect the parent EO 10289 - along with 62 other executive orders. That is how paragraph (j) was amended to remove the power in question. This Order can be found in its entirety in the Federal Register 52 FR 34617.
Even if one won't believe CRS or Griffin, consider that Bill Still of "The Money Masters" fame debunks the JFK myth unequivocally (and to be clear, TMM itself is riddled with bad information and out of context quotations--I have been told repeatedly that Still has tried for years himself to correct the bad info but the copyright holder won't make changes; I can't confirm that):
And for the record, no, President Lincoln wasn't assassinated for trying to get rid of the Fed either which wasn't created for another half-century after his death. The best way for the free banking, sound money, anti-Fed, pro-gold, pro-Bitcoin, whatever advocates to succeed is to denounce the anti-Semitism and debunk baseless conspiracy mongering of the idiots trying to latch on to our issues.
(Those of you who read the comments will recognize Mike Sproul's name. I offered him a guest post, which is below. I will respond with my thoughts in a few days, and we may then do one more post apiece reacting to each other's points. I have added a couple of clarifications in square brackets in Mike's text.)
If you want to understand paper money, a good place to start is the year 1685, a year that marked one of the earliest examples of government-issued paper money.
In Canada in 1685, when the French military payroll was delayed, monnaie de carte or card money was introduced as a temporary medium of exchange redeemable out of the first coin received from France. It consisted of handwritten denominations on quarter sections of playing cards duly signed and sealed by the intendant [governor], Jacques Demuelles. It was declared legal tender, protected by counterfeiting punishments, and was redeemed within three months. (Eric Newman, The Early Paper Money of America, 1965, p. 7.)
Suppose that the government owed 30 livres [a livre being the currency unit] of back pay to each of 1,000 soldiers, for a total of 30,000 livres of wages payable. Suppose also that a shipment of 30,000 livres in coin was due to arrive from France after three months. A prudent strategy for the intendant would be to first issue 10,000 paper livres, pay 10 livres to each of the soldiers, and promise that each paper livre would be redeemable for 1 livre in coin when the coins arrived from France. Assuming this initial issue went well, he could then issue the other 20,000 paper livres and pay each soldier the 20 livres still owing.
1) 30,000 lvs. coins (due from France)
30,000 lvs. wages payable
+10,000 lvs. paper paid to soldiers
-10,000 lvs. wages payable
+20,000 lvs. paper paid to soldiers
-20,000 lvs. wages payable
4) +1000 lvs. (government bond)
+1000 lvs. paper spent on a bond
5) +2000 lvs. IOU from a farmer
+2000 lvs. paper lent to a farmer
So far, the colony’s monetary activities can be summarized in lines 1-3 of the T-account above. Line 3 raises an interesting question: The 20,000 livres issued in line 3 tripled the quantity of paper money, from 10,000 to 30,000 livres. Would this cause inflation? The quantity theory of money suggests that it would, since there would be three times as much money chasing the same goods. But there is another theory, the backing theory of money, which says that the 30,000 paper livres are adequately backed by 30,000 in coins due from France, so each paper livre must be worth 1 livre in coin. Furthermore, suppose the colony issued another 1000 paper livres and used them to buy a French government bond worth 1000 livres (line 4), and then issued another 2000 paper livres and lent them to a farmer (line 5). The backing theory still says there would be no inflation, since the 33,000 paper livres would be adequately backed by 33,000 livres of the issuer’s assets. Of course, if that 1000 livre bond turned out to be worthless, and if the farmer defaulted on his loan, then the 33,000 paper livres would be backed by only 30,000 livres of assets, and the backing theory would imply about 10% inflation.
The basic difference between these two theories of money is that the quantity theory says that inflation happens when the quantity of money outruns the economy’s production of goods, while the backing theory says that inflation happens when the quantity of money outruns the money-issuer’s assets. The backing theory seems right in this simple case, but can this result be extended to modern inconvertible paper money?
The most obvious difference between the card money and modern paper money is that the card money was inconvertible for 3 months, while modern paper money is usually inconvertible for an unspecified period. But as long as the money-issuer holds enough assets to buy back all the money it has issued at par, there is not much reason for the public to care whether convertibility is delayed for a few days or for a few years. The card money was backed by the colony’s assets, and it was inconvertible for a short time. The modern U.S. dollar is backed by the Federal Reserve’s assets, and it is inconvertible for a long time. If the backing theory is true of the card money, it is also true of the U.S. dollar.
So is the backing theory right? Based on this short example, even skeptics might admit that it is at least plausible in certain cases. I would go further and argue that it is just as true of modern inconvertible paper money as it was for the Canadian playing card money. But the backing theory (and its alter-ego, the real bills doctrine) has been the subject of intense debate for over 300 years, and it will take a few more blog posts before the question can be settled once and for all.
I think I posted this when it came out earlier this year, but if not, here's a study I did for Mercatus that is intended as an introduction to US monetary policy, including some history, some theory, some policy, and some discussion of alternative institutional arrangements. I hope folks find it useful.
An "idiot savant" is, according to my Webster's New Collegiate Dictionary, "a mentally defective person who exhibits exceptional skill or brilliance in some limited field." So what's the term for an otherwise intelligent person who exhibits exceptional idiocy in some limited field? Well, I don't know the correct general term, assuming one exists. But for the particular instance I have in mind, "Josh Barro" will do nicely.
In his column for today's Business Insider, Mr. Barro, finding himself miffed by the concurrent decision of Delta Airlines and Hyatt Hotels to reduce the award values of the frequent customer credits he'd been accumulating from them, elects to complain about it.
But it appears that Barro had misgivings about employing the Business Insider's scarce column inches (and, presumably, getting paid for doing so) for what was, after all, mere personal kvetching of the sort best reserved for the poor sap on the next bar stool, and then only after at least one drink too many. So Barro decided that he'd better justify putting his little tirade into print by drawing from it a far-reaching economic lesson concerning...you guessed it: free banking!
Here, in full, is the lesson:
Libertarians often advocate for a system of "free banking" where monetary authority is shifted to private actors, who would theoretically be policed by consumers who demand stable currency values and protection from inflation. But as we can see, America already has a system of private monetary authorities, and they're an inflationary mess.
Airlines and hotel firms lock in loyal customers, only to pull the rug out from under them once they've run up significant asset balances. They cannot resist the urge to print. Can you imagine the disaster if we extended this system to ordinary currency.
Well, there you have it. No need to actually look into the long history of highly-reputable private currency suppliers in Scotland or Canada or the U.S. Suffolk System or a dozen other places. And so what if banks today have for some reason still not figured out that they might treat their customers' deposit credits like so many reward points, to be devalued at whim. ("So, Mr. Barro: you'd like to buy 100 Federal Reserve award dollars? No problem. That will be cost you $200 in deposit credits. What's that? Oh, I'm terribly sorry: didn't you receive our notice regarding the change in our award terms?) And never mind, finally, the actual record of the dollar's "devaluation," in terms either of goods generally or of gold--a record showing that only the Fed, among all past or present U.S. paper currency issuers, has ever managed to permanently devalue its paper with impunity.
Why bother, in short, referring to any facts at all, when all you need is a little analogy, served-up with a great dollop of unmerited self-assurance.
Commenters on many blogs, this one included, often seem to labor under the mistaken notion that they are going to change everyone’s mind. Even leaving aside that on controversial subjects, many comments are mere tired sarcasm and tedious ranting, there are deeper reasons why you will not write The Blog Comment That Changed The World.
The Internet is not Plato’s Academy or Aristotle’s Lyceum; it is more like the world’s biggest bar room. On their stools sit all sorts of characters, from the witty and well informed to the dull and stupid, opining loudly to all around who will listen to them. The other drinkers retort with a like range of ability. Occasionally somebody says something so compelling that it commands general assent, at least until the next round of drinks comes.
On the topics that this blog and many others cover, there is in the background a large body of scholarly writing (I hesitate to call it a literature, given how poorly so many economists write). Sometimes the posts acknowledge it, while other times it is only there implicitly, but it is always there. On the topics I write about, almost always I have read some of the major scholarship and sometimes a lot of minor scholarship. Your blog comment is unlikely to change my mind for the same reason that my blog post is unlikely to change the minds of the scholars whose work I mention, if they are still alive. The intellectual effort that goes into a blog post or comment is small compared to the amount that typically goes into a piece of scholarship. It is perfectly justifiable for somebody who has thought a long time on a subject, especially if he has contributed to its scholarship, not to be swayed from his position by some stray words on a blog. If you say, “Yes, but the logic (or the facts) are on my side,” well then, go write it up in a scholarly form and try to get agreement on it from some experts, not just your personal cheering section.
And while we are still in the bar room, I will share one of my pet peeves with you: commenters who do not use their real names. In certain forums, it is appropriate to protect privacy. I perfectly well understand if you are logged into a medical blog and you do not want the world to know that you have foot fungus, or if you are a Cuban dissident who does not wish to end up in jail for your posts on a political blog. On the Free Banking blog, such considerations do not apply. I heavily discount pseudonymous comments because failing to use one’s real name in this context indicates a lack of intellectual courage. While it is true that, as the saying goes, good wine needs no bush, with so many wines to choose from whose origin is well attested, why should I bother with what experience has too often proved to be merely vinegar?