{"id":22438,"date":"2017-01-11T16:16:57","date_gmt":"2017-01-11T21:16:57","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22438"},"modified":"2017-01-11T16:16:57","modified_gmt":"2017-01-11T21:16:57","slug":"money-creation-and-the-boom-bust-cycle","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22438","title":{"rendered":"Money Creation and the Boom-Bust Cycle"},"content":{"rendered":"
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Money Creation and the Boom-Bust Cycle\u00a0<\/a><\/h3>\n<\/div>\n
A Difference of Opinions<\/strong><\/div>\n
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In his various writings, Murray Rothbard argued that in a free market economy that operates on a gold standard, the creation of credit that is not fully backed up by gold (fractional-reserve banking) sets in motion the menace of the boom-bust cycle. In his\u00a0The Case for 100 Percent Gold Dollar<\/em>\u00a0Rothbard wrote:<\/p>\n

I therefore advocate as the soundest monetary system and the only one fully compatible with the free market and with the absence of force or fraud from any source a 100 percent gold standard. This is the only system compatible with the fullest preservation of the rights of property. It is the only system that assures the end of inflation and, with it, of the business cycle. (1)<\/em><\/p><\/blockquote>\n

Murray Rothbard was convinced that we should return to a sound monetary system based on the market-chosen money commodity gold. Note that the use of gold as money as such cannot keep banks from issuing\u00a0fiduciary media<\/em>\u00a0(a.k.a.\u00a0uncovered money substitutes<\/em>). The important thing is therefore that the monetary and banking system are\u00a0free<\/em>. A free banking system will develop along sound lines of its own accord, not least because banks have to continually clear transactions between each other and will tend to shun overextended lenders. A free market monetary\/ banking system would likely be different from today\u2019s system in numerous aspects, but it would be just as sophisticated and efficient. Most importantly, it would be economically sound and the likelihood that severe business cycles emerge would be vastly lower.\u00a0Photo via mises.org<\/p>\n

Some economists such as George Selgin and Lawrence White have contested this view. In his article in\u00a0The Independent Review<\/em>\u00a0George Selgin argued that it is not true that fractional-reserve banking must always set in motion the menace of the boom-bust cycle. According to Selgin:<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Money Creation and the Boom-Bust Cycle\u00a0 A Difference of Opinions In his various writings, Murray Rothbard argued that in a free market economy that operates on a gold standard, the creation of credit that is not fully backed up by gold (fractional-reserve banking) sets in motion the menace of the boom-bust cycle. In his\u00a0The Case […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,61,5451,11498,536,3731,545],"class_list":["post-22438","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-banking","tag-boom-bust-cycle","tag-frank-shostak","tag-money","tag-money-creation","tag-murray-rothbard"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22438"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22438\/revisions"}],"predecessor-version":[{"id":22439,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22438\/revisions\/22439"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}