Monetary Policy: Discretion, Rules, or Markets? | Lucas M. Engelhardt

Recorded at the Mises Institute in Auburn, Alabama, on 18 July 2019.
Mises University is the world's leading instructional program in the Austrian school of economics. Mises.org/MU19

[@axle9262]

The speaker's technique is a bit distracting (all these "right?"s are a but irritating once you pay attention) but the content of the speech was interesting.

[@garytarbell]

Yes, he's quite articulate and motivating, except for his vocal ticks. I'm sure he's aware if it and hopefully working on it.

[@marcsarfati3291]

Speech starts basic. But Get super smart 10 mins in

[@marcoantoniodamasceno2745]

But if we did not have the problem of political interference in the creation of money, would there be no problem of credit expansion?

[@patrickbateman783]

If it's Private sure.

[@JM-ws6ku]

If the Fed or the Bank of England fell tomorrow, and a true Gold (or silver) Standard, there would be the adverse clearing mechanism; the banks that have a lower reserve ratio (and thus engage in a greater (or more liberal) artificial credit expansion relative to other banks) would find that their borrowers would be paying out of their accounts. By the law of averages, this would mean that they would find themselves with many days of net settlements to the more conservative banks. This means that specie would drain from liberal banks to conservative banks, which is more likely to reveal that the more liberal banks are close to bankruptcy. Assuming that we abolish or privatise deposit insurance and other bailouts, then the liberal banks would have to 1) borrow reserves of gold (or gold-backed paper), and 2) wait for loan repayments to destroy the artificial credit inflation and thus raise their reserve ratios. This is a painful process, especially if it resulted in a bank run, but the pain should incentivise the banks to hold a high, and stable, reserve ratio, especially as free entry allows new banks to enter the market. Throughout English and American history, banks have lobbied for government regulation of banking to profit big liberal banks, such as the Bank of England (1694), the suspension of specie payments (UK 1797, 1914, 1931; US 1814, 1819, 1933 and 1971) the 1st & 2nd Banks of the United States (1791 & 1817), and the US National Banking System (1863-64).