A discussion sparked at ThinkMarkets resulted in this post on free-banking vs 100% reserves at The Austrian Economists that sums it up better than I could (UPDATE: Continued here). I’m almost kicking myself for not having used the phrase “fatal conceit” earlier on the topic. Not that I’ve read any of Hayek’s books (other than the cartoon version of Road to Serfdom), but the phrase is terribly apt.
On a related note, a long paper on Milton Friedman linked by Marginal Revolution a few days ago contained the quote “Particularly in the 1940s and 1950s, he was a zealous advocate of a reform proposal, somewhat nondescriptively referred to as the “Chicago plan” or “100 per cent money,” of 100 percent mandatory reserve requirements, which amounted to the de facto nationalization of the depository activities of the entire commercial banking system.” I think they might be using “100% reserves” in a different sense. A long while back I came across this, which said something similar but because I could not figure out what the citation was referring to or verify the second quote through googling I forgot about it.
On an unrelated note, Bob Murphy recalls a case where Friedman and the monetarists were proven wrong while Arthur Laffer and those awful (just ask Megan McArdle) supply-siders were right.
Back to central banking: One of Stephan Kinsella’s posts at the Lew Rockwell blog snarked at central bank independence, I replied (linking to Caplan) that the less independence central banks are the more inflationary they are, and while he agreed that he didn’t want any more inflation he didn’t seem at all persuaded. There are no comments at the LR blog (unlike the Mises blog, where I am banned) so discussion will have to take place here.
Speaking of the Mises blog, they just highlighted a paper by Mark Crovelli, who had nearly gotten a PhD in poli-sci (oddly enough still using a praxeological approach) but in disgust went back to working construction. Hats off to him for continuing to write such papers anyway. The paper disputes the von Mises brothers on assigning probabilities to a single event. Bayesian superstar E. T. Jaynes took on Richard von Mises’ conception of probability in a very clever paper here.
Finally, a weird coincidence: What are the odds that AidWatch and The Money Illusion would both have posts with the same French title at the top of their front page (not anymore, but a little while ago) at the same time?