Comments (23)

• Marc Sheffner

  Thanks for posting this. To an economic dummy like me, this is a very succinct summary of the key arguments.

  Published: July 26, 2009 5:23 AM

• giladr

  thanks for the links Tom!
  it was incredibly annoying to watch. comments like "money today is created by the market" or "gold was rejected by the market" or "the fed does not determine interest rates" made me just pull on the little hair i got left... do you have any explanation for this? do they really believe what they're saying or are they just playing dumb??? (very successfully if i might add)

  in great contrast, i really appreciated your opening statement and comments. i just wish you had got that john fund guy with "you don't have a plan" kind of idiotic comments.

  Published: July 26, 2009 5:24 AM

• Marc Sheffner

  Warren Coats: "Central banks don't have a very good history." End of debate.

  Warren Coats: "Let's look at where the world has come in the last several decades, because a lot has been learned, and monetary policy has been dramatically better..."

  !?
  End of argument.

  Published: July 26, 2009 6:02 AM

• prettyskin

  Coates said that interest rates would have been higher without the Fed. What's wrong with higher interest rates? Absolutely nothing. The people will make natural self-directive decisions accordingly.

  Published: July 26, 2009 9:24 AM

• Tom Woods

  Actually, my recollection from the debate is that Coats said interest rates would have been _lower_ under the gold standard.

  Published: July 26, 2009 9:32 AM

• Joe

  The problem with having higher interest rates is that the fed can't induce easy-credit policies as easily. When we have these government-induced boom-bust cycles followed by bailouts, it allows the government to steal more from everyone. This is important to central planners.

  Published: July 26, 2009 9:34 AM

• Joe

  giladr,

  "you don't have a plan" is a comment that is meant on attack on someone, but with Austrian economics, it's the whole point! ;) Instead of having a plan to enact which restricts people and gives the government more power, we would actually prefer to have fewer plans and allow the people and the market to decide for themselves what they actually want.

  Published: July 26, 2009 9:38 AM

• Fephisto

  "We need a plan to stop planning."

  At this point I knew the FED apologists were COMPLETELY full of crap.

  Published: July 26, 2009 11:03 AM

• Quidam

  I don't get it, Warren Coats said there weren't legal tender laws that prevented gold as being used as money. Is he right? What exactly are the laws that do this? I'm sure there has to be some or the feds wouldn't have raided liberty dollar.

  Published: July 26, 2009 12:28 PM

• John M

  @Quidam: There are capitals gains taxes on precious metals as well as legal tender laws that make only contracts negotiated in dollars protected in courts of law. If you make a contract in gold and the contract goes sour you can't take the claim to court.

  Liberty Dollar was most likely seized because it resembled too much of the real US dollar. Von Nothous could have gone to much greater lengths to distinguish the two, his laziness/shrewdness(depending on your perspective) being his downfall.

  @TomWoods: What debate? I watched the whole thing and it was kind of a joke. John Fund's argument: Its not politically realist to abolish the Fed. Warren Coats' argument: We didn't mess up ALL the time.

  What scares me the most is that this Warren Coats is as establishment as establishment can get. How many years in the IMF? If this is one of the most senior representatives of the central banking cartel and these are the best arguments he can formulate, how can the world not see these banksters for the incompetent fraudsters they are? BTW, great job.

  Published: July 26, 2009 1:28 PM

• Matt

  Chalk one up for the good guys. Maybe Mr. Fund will go back to debating Ben Affleck and Barney Frank on that Bill Maher show. He was clearly out of his league here.

  Published: July 26, 2009 3:02 PM

• Paul Vahur

  Thank god Estonia largely ignored the IMF advises in early '90s and that we did not have a comprehensive "plan" to go to free market. I guess that is one of the main reasons we are so much more economically freer and more prosperous than some of our co-sufferers from Soviet Union...

  I think that the fact that there was no "plan" to dismantle Soviet Union is one of the reasons it vanished without much bloodshed and damage. Had there been a conference a la Jalta I guess there would have been much more trouble.

  Published: July 26, 2009 3:10 PM

• Ryan

  the Austrians undoubtedly won this debate.

  Published: July 26, 2009 3:14 PM

• Emil Suric

  "Actually, my recollection from the debate is that Coats said interest rates would have been _lower_ under the gold standard."

  Absolutely insane. They get more and more creative with each passing year.

  Published: July 26, 2009 4:23 PM

• Fephisto

  "They get more and more creative with each passing year. "

  You give them too much credit Emil.

  Published: July 26, 2009 4:36 PM

• bearing01

  Thank you Tom and Gene.

  I actually think John Fund was sort of on our side.

  Too bad you guys didn't have more time to address other things that Mr. Coats had to say. You did great for the time allotted.

  Also, one of Coats' arguments for the Fed was that they did a great job last fall of increasing liquidity to bail out the system. Did he not realize that without the Fed no crisis would have happened in the first place? And thus no effort on their part would have been required otherwise? Their efforts were basically to "patch" a problem that they themselves created.

  And Tom, thanks for Meltdown. I bought it for my wife and have since given it to my friends. I hope this book will become good bait to stimulate interest in Austrian Econ. and to get more people interested in free markets and Liberty.

  Published: July 26, 2009 10:28 PM

• randy

  bearing01
  "I actually think John Fund was sort of on our side."

  Don't be fooled. He's the kind of guy that knows how to be sympathetic to an audience, taylors his message to what it expects, while not-to-subtly undermining confidence in what "we all wish we could get"...

  Published: July 26, 2009 11:57 PM

• Thinker

  Watching this, I had to wonder "Could there have been two more incompetent advocates for the Fed?" What they didn't concede, they lost. A vehement statist would have had more interesting responses; just as idiotic, but more interesting.

  Published: July 27, 2009 3:32 AM

• Lysander26

  Fund's point seemed to be that the power elite will not let go of their monopoly on money creation. So one wonders why they would allow any restrictions on their control? But he is a valid point, governments have made only superficial concessions to the people. Will they return to a gold standard to restore prosperity or will they cling to their beloved fiat system and destroy society?

  Published: July 27, 2009 9:32 AM

• Kyle Butt

  The whole issue reminded me of the essay "Do You Hate the State?" by Murray Rothbard. It seemed we had two state haters verses two conservatives who think that the fed is too powerful, but that it's silly to abolish it. Count me as a button pusher. http://www.lewrockwell.com/rothbard/rothbard75.html

  Published: July 27, 2009 12:18 PM

• JKS

  I'm no central banker, but didn't Coates shoot his own argument down by quoting inflation at 3% and growth in real GDP at 3.2%? Soooo, no growth then?

  Published: July 27, 2009 1:50 PM

• Dick Fox

  Because Austrians left Mises on the deflation issue Coates can make the claim that since Volker the inflation rate has been about 3% per annum. This is a bogus argument when you take into account that the FED has generated both inflation and deflation during this period sometimes within the same year. Austrians are afraid to point this out because they favor deflation.

  Monetary gyrations are always destructive whether inflation or deflation. A floating currency creates both inflationary and deflationary problems and as Mises teaches they can both exist at the same time.

  Not only does the FED face trying to hit two targets with one arrow, unemployment (or economic contraction) and inflation, but they are faced with dealing with shortage problems in one industry created by deflation (oil for example) while these problems are axacerbated by inflationary malinvestment "bubbles" putting additional pressure on the shortages through artificial demand.

  A floating currency is a total disaster.

  Published: July 27, 2009 2:48 PM

• Mashuri

  Kyle,

  Great link! I hadn't seen that excellent essay before now. I guess I'm a rare breed (a la Ron Paul): A minarchist button pusher.

  Published: July 27, 2009 3:14 PM