Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 1308-12  | Added on Friday, October 28, 2011, 03:05 PM

As both Selgin (1988a, 54–55) and Horwitz (1990, 4–6) argue, the demand for inside money represents voluntary (not forced) savings on the part of consumers. Consumers let their cash balances rise by choosing to refrain from acts of consumption. This is unavoidable as long as consumers must give up real goods in order to acquire money. In particular, by not redeeming the deposit accounts or banknotes they hold, consumers leave more specie reserves in the hands of banks, “which is equivalent to a very short term act of savings” (Horwitz 1990, 4).

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 3027-30  | Added on Wednesday, October 26, 2011, 07:54 PM

focusing. To be able to focus is a great virtue if you are a watch repairman, a brain surgeon, or a chess player. But the last thing you need to do when you deal with uncertainty is to “focus” (you should tell uncertainty to focus, not us). This “focus” makes you a sucker; it translates into prediction problems, as we will see in the next section. Prediction, not narration, is the real test of our understanding of the world.

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 816-19  | Added on Wednesday, October 26, 2011, 05:18 PM

If the interest rate11 is the price of money, then there is a problem. It is unavoidable that the interest rate is the price of credit, or loanable funds, but how can the interest rate be the price of both money and credit? Surely to suggest such a thing is erroneously to posit that money and credit are identical. This is very common, but nonetheless false.

Yogi Berra

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 3053  | Added on Wednesday, October 26, 2011, 07:57 PM

The great baseball coach Yogi Berra has a saying, “It is tough to make predictions, especially about the future.”

Contos Fluminenses

Contos Fluminenses
- Highlight Loc. 1627-28  | Added on Friday, October 28, 2011, 01:13 AM

Era em Petrópolis, no ano de 186... Já se vê que a minha história não data de longe. É tomada dos anais contemporâneos e dos costumes atuais.

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 3031-35  | Added on Tuesday, October 25, 2011, 06:38 PM

Mark Spitznagel found a martial version of the ludic fallacy: organized competitive fighting trains the athlete to focus on the game and, in order not to dissipate his concentration, to ignore the possibility of what is not specifically allowed by the rules, such as kicks to the groin, a surprise knife, et cetera. So those who win the gold medal might be precisely those who will be most vulnerable in real life. Likewise, you see people with huge muscles (in black T-shirts) who can impress you in the artificial environment of the gym but are unable to lift a stone.

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 2799-2801  | Added on Tuesday, October 25, 2011, 05:51 PM

Note here that I am not saying causes do not exist; do not use this argument to avoid trying to learn from history. All I am saying is that it is not so simple; be suspicious of the “because” and handle it with care—particularly in situations where you suspect silent evidence.

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 2791-96  | Added on Tuesday, October 25, 2011, 05:51 PM

My biggest problem with the educational system lies precisely in that it forces students to squeeze explanations out of subject matters and shames them for withholding judgment, for uttering the “I don’t know.” Why did the Cold War end? Why did the Persians lose the battle of Salamis? Why did Hannibal get his behind kicked? Why did Casanova bounce back from hardship? In each of these examples, we are taking a condition, survival, and looking for the explanations, instead of flipping the argument on its head and stating that conditional on such survival, one cannot read that much into the process, and should learn instead to invoke some measure of randomness (randomness, in practice, is what we don’t know; to invoke randomness is to plead ignorance).

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 713-20  | Added on Tuesday, October 25, 2011, 05:18 PM

A third distinctive feature of free banking deals with the relationship between a competitively issued money supply and the market for loanable funds. Specifically, the question is whether or not the preservation of monetary equilibrium, by means of changes in the supply of loanable funds, is consistent with voluntary savings. Selgin argues that it is, since the “aggregate demand to hold balances of inside money is a reflection of the public’s willingness to supply loanable funds through the banks whose liabilities are held. To hold inside money is to engage in voluntary saving” (1988a, 54). This is true because to hold the liabilities of free banks is to choose to refrain from purchasing goods and services. In effect, as long as the supply of inside money keeps pace with changes in the demand for inside money, free banks loan out only that which has been willingly saved. They are “simply intermediaries of loanable funds” (Selgin 1988a, 55).

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 689-92  | Added on Tuesday, October 25, 2011, 11:41 AM

In order to redeem notes and clear debts with other banks, a free bank must hold some specie reserves. This fact, if taken alone, might seem to imply that such a bank’s short-run marginal costs are definitely positive but constant, since, for any given income velocity of money, the same fractional reserves are held as backing for each additional unit of currency in circulation. However, it is likely that the unit cost of acquiring specie rises with the demand for it.

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 459-63  | Added on Tuesday, October 25, 2011, 01:01 AM

From a periodic note-exchange, it is but a small conceptual step to a formal clearinghouse function. The clearinghouse, by supervising the multilateral note and deposit exchange for a group of banks, greatly reduces the time and effort involved in the many pairwise clearing relations that would otherwise be required. Furthermore, the clearinghouse can serve as a credit information bureau, can police individual banks so as to ascertain their soundness, and can provide short-term liquidity to its members in times of financial crisis (Selgin and White 1987, 450).

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 452-58  | Added on Tuesday, October 25, 2011, 01:00 AM

To economize on the use of commodity money and to reduce the marginal liquidity costs of maintaining large specie reserves, banks naturally sought some form of regular note-exchange system, which would, by increasing the frequency with which rival banks’ notes were accepted at par, increase the marketability of their own notes. The same result might be accomplished in a very different way. Banks might engage in “note-duelling.” That is, they might begin buying a rival’s notes with the express purpose of presenting them suddenly to the issuer for redemption in specie, thereby hoping to damage the rival’s reputation or even precipitate his insolvency. Still, the likely result is widespread mutual acceptance of banknotes at par (Selgin and White 1987, 446–47).

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)

Free Banking: Theory, History and a Laissez-Faire Model (Larry J. Sechrest)
- Highlight Loc. 379-80  | Added on Tuesday, October 25, 2011, 12:30 AM

James Buchanan, finding the existing operating structure wholly inadequate, proposes that the salaries of Fed officials be inversely related to the rate of inflation

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 2716-18  | Added on Tuesday, October 25, 2011, 12:21 AM

Once again, I am not dismissing the idea of risk taking, having been involved in it myself. I am only critical of the encouragement of uninformed risk taking. The überpsychologist Danny Kahneman has given us evidence that we generally take risks not out of bravado but out of ignorance and blindness to probability!

The Black Swan (Nassim Nicholas Taleb)

The Black Swan (Nassim Nicholas Taleb)
- Highlight Loc. 2660-62  | Added on Tuesday, October 25, 2011, 12:12 AM

This brings us to gravest of all manifestations of silent evidence, the illusion of stability. The bias lowers our perception of the risks we incurred in the past, particularly for those of us who were lucky to have survived them. Your life came under a serious threat but, having survived it, you retrospectively underestimate how risky the situation actually was.

All Things Considered (Gilbert Keith Chesterton)

All Things Considered (Gilbert Keith Chesterton)
- Highlight Loc. 334-38  | Added on Monday, October 24, 2011, 01:00 AM

The whole error in both cases lies in the fact that the refined persons are attacking politics and journalism on the ground of vulgarity. Of course, politics and journalism are, as it happens, very vulgar. But their vulgarity is not the worst thing about them. Things are so bad with both that by this time their vulgarity is the best thing about them. Their vulgarity is at least a noisy thing; and their great danger is that silence that always comes before decay. The conversational persuasion at elections is perfectly human and rational; it is the silent persuasions that are utterly damnable.

The Theory Of Money And Credit (Ludwig Von Mises)

The Theory Of Money And Credit (Ludwig Von Mises)
- Highlight Loc. 914-19  | Added on Sunday, October 23, 2011, 06:26 AM

It is considerations such as these that have led the present writer to give the name of money-substitutes and not that of money to those objects that are employed like money in commerce but consist in perfectly secure and immediately convertible claims to money. Claims are not goods;1 they are means of obtaining disposal over goods. This determines their whole nature and economic significance. They themselves are not valued directly, but indirectly; their value is derived from that of the economic goods to which they refer. Two elements are involved in the valuation of a claim: first, the value of the goods to whose possession it gives a right; and, second, the greater or less probability that possession of the goods in question will actually be obtained.

All Things Considered (Gilbert Keith Chesterton)

All Things Considered (Gilbert Keith Chesterton)
- Highlight Loc. 264-66  | Added on Sunday, October 23, 2011, 06:09 AM

There is an idea that it is humiliating to run after one's hat; and when people say it is humiliating they mean that it is comic. It certainly is comic; but man is a very comic creature, and most of the things he does are comic--eating, for instance.

The Theory Of Money And Credit (Ludwig Von Mises)

The Theory Of Money And Credit (Ludwig Von Mises)
- Highlight Loc. 889-91  | Added on Friday, October 21, 2011, 11:17 AM

A claim to money may be transferred over and over again in an indefinite number of indirect exchanges without the person by whom it is payable ever being called upon to settle it. This is obviously not true as far as other economic goods are concerned, for these are always destined for ultimate consumption.

The Panic of 1819 (Murray N. Rothbard)

The Panic of 1819 (Murray N. Rothbard)
- Highlight Loc. 467-71  | Added on Friday, October 21, 2011, 01:15 AM

As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”

Contos Fluminenses

Contos Fluminenses
- Highlight Loc. 1096-98  | Added on Wednesday, October 19, 2011, 12:23 AM

— Mas a sociedade?
— Que sociedade?
— A sociedade que nos tem em conta de libertinos, a ti e a mim, é natural que não aprove o meu ato.
— Já vejo que é uma recusa, disse Gomes entristecendo.
— Qual recusa, pateta! É uma objeção, que tu poderás destruir dizendo: a sociedade é uma grande caluniadora e uma famosa indiscreta.

The Panic of 1819 (Murray N. Rothbard)

The Panic of 1819 (Murray N. Rothbard)
- Highlight Loc. 358-63  | Added on Wednesday, October 19, 2011, 12:08 AM

Evidence is very scanty on the behavior of wage rates during this period. In Massachusetts, the wages of agricultural workers fluctuated sharply with the boom and contraction, averaging sixty cents per day in 1811, $1.50 in 1818, and fifty-three cents in 1819. The wage rates of skilled labor, on the other hand, remained stable throughout at approximately $1 per day. In Pennsylvania, woodcutters who averaged a wage of thirty-three cents per cord in the first half of the nineteenth century were paid only ten cents per cord in 1821 and 1822. Unskilled turnpike workers paid seventy-five cents a day in early 1818 received only twelve cents a day in 1819.

Contos Fluminenses

Contos Fluminenses
- Highlight Loc. 1045-47  | Added on Tuesday, October 18, 2011, 01:45 AM

foi almoçar, exatamente quando entrava o irmão, que não pôde deixar de exclamar:
— A boa hora almoças tu!
— Aí vens tu com as tuas reprimendas. Eu almoço quando tenho fome... Vê se me queres agora escravizar às horas e às denominações. Chama-lhe almoço ou lunch, a verdade é que estou comendo.

Stephen LaBerge - Exploring the World of Lucid Dreaming

Stephen LaBerge - Exploring the World of Lucid Dreaming
- Highlight on Page 27 | Added on Tuesday, October 18, 2011, 01:13 AM

Even though most people enjoy sleeping late, we don’t all have the time to do it. If you find that you just cannot afford to spend more time in bed, there is a simple secret to increasing your frequency of lucid dreaming that requires no more time than the usual number of hours you sleep. The secret is to rearrange your sleep time. If you nor-mally sleep from midnight to 6: 00 a. m., then get up at 4: 00 a. m. and stay awake for two hours, doing whatever you need to do. Go back to bed and catch up on your remaining sleep from 6: 00 to 8: 00 a. m. During the two hours of delayed sleep you will have much more REM than you would have had sleeping at the usual time (4: 00 to 6: 00), and you will enjoy an increased likelihood of lucid dreaming, with no time lost to sleep.

A teoria austríaca do intervencionismo

A teoria austríaca do intervencionismo
- Highlight Loc. 159-61  | Added on Tuesday, October 18, 2011, 01:08 AM

o problema do estado é extrair o máximo de recursos do hospedeiro sem matá-lo.  Paradoxalmente, o fantástico grau de adaptabilidade da ação livre, capaz de sobreviver a ataques extremamente agressivos do parasita, é a causa última da ubiquidade e permanência do intervencionismo.

A teoria austríaca do intervencionismo

A teoria austríaca do intervencionismo
- Highlight Loc. 64-73  | Added on Tuesday, October 18, 2011, 12:53 AM

 Se, por exemplo, o preço do leite for alto o bastante de modo a impossibilitar um nível de consumo tido como desejável, o governo poderia estabelecer um preço máximo para o produto.  O preço inferior faz com que os vendedores retirem os produtos não perecíveis do mercado, para evitar prejuízos.  Isso provoca uma reação governamental, que decreta a liberação compulsória dos estoques. Mas, como todo aluno de Introdução à Economia sabe, ao preço menor a demanda será maior do que a oferta e a quantidade de leite de fato transacionada diminui em vez de aumentar.  O governo poderá então impor um sistema de racionamento para evitar as consequências das intervenções anteriores. Com o esgotamento dos estoques, para evitar a interrupção da oferta das firmas que operariam com prejuízo, o governo deverá então controlar os preços dos insumos, desencadeando assim o mesmo tipo de efeito em outros mercados, com o capital migrando para os setores não controlados e frustrando o plano inicial.  Para obter uma alocação de recursos consistente, o controle deve então se entender para todo o sistema de preços, controlando salários e em última análise forçando os trabalhadores e empresários a empregar seus esforços nas direções desejadas pelo governo.  Chega-se assim a um sistema totalmente controlado — o socialismo.