ASC Day 2: Monetary Policy, Entrepreneurship, Security, and Constitutional Order

I don’t have the time to write a whole bunch because I need to prepare for my talk tomorrow. So, here are some of my notes from my favorite lectures of the day and a video wrap up as well:

• Walter Block and William Barnett – Time Deposits: Fraud and the ABCT
  • Debate that fractional reserve banking is illegal
  • Other side says that FRB notes can be considered contracts
    • Problem: not all contracts can be legitimate
    • Example: I contract with Walter for Walter to murder someone
  • More proper position is property rights
    • Can’t have two people owning 100% of the same thing
  • ABCT: mises originated, Hayek expanded “Monetary Theory of the Business Cycle”
    • Mises called it the circulating credit theory of the trade cycle
  • What we assume when we say that monetary inflation causes the business cycle is that the money is entering the market via credit markets.
    • Government could instead just use printed money to pay off receipts (like salaries)
    • According to Barnett, this would not constitute the conditions that create BC
  • What’s the problem with a demand deposit?
    • Banks are borrowing short and lending long
    • Intertemporal misallocation
    • Lenders want to be more liquid than they want to be as borrowers
    • Dealers work in between
  • Credit has two dimensions: Dollar value, and Time
  • Banks don’t have the right to lend money for longer than which they have the property right for.
    • i.e. I lend $100 for 1 year, bank cannot, praxeologically, turn around and lend the $100 for 5 years
    • This is a credit inflation
  • Time mismatching of borrowers and lenders
    • In example above, no monetary inflation, but credit inflation is happening.

• Anthony Gregory – Habeas Corpus, Centralism, and Decentralism
  • Most people go back to the Magna Carta
    • But it was 100 years later before we see habeas corpus writs
    • Authoritarian method of law
  • Habeas corpus evolved over time
    • Impetus was to protect high up officials
  • Some moral principle involved, people should be held just for the hell of it.
  • An admirable bottom-up tradition in American colonies
  • By the time of the revolution, all the colonies had
  • Here’s the interesting thing, constitution had habeas corpus but it was a step backwards because the states were already practicing it.
    • Who was it who issued habeas writs in antebellum America?
    • States had the right to issue writs of habeas corpus as a check AGAINST the federal government.
  • Once the FG used writs of habeas corpus against the states, downhill
    • Even some of our more admirable founding fathers suspended habeas
  • Some southern states used habeas to get slaves back.
  • Northern states passed liberty laws about slaves
  • After civil war, interesting reconstruction dynamic
    • On one hand, wanted slaves to have their rights protected
    • But in the next year, it was used to protect a guy who criticized reconstruction. Oops, they didn’t like this.
  • Last straw, 1871
    • Used to be a state check on Federal power.
    • Now a Federal check on state power.
  • What’s unfortunate is that we have moved away from the original design completely.