Have these points been refuted?
If not, are any of them valid?
I’m not the most knowledgable about economics in general (I’m only a first-year economics major who discusses these kinds of things in his spare time), but this looks to me like one of the most compact and solid series of criticisms I’ve seen just about anywhere. . . . So?
I would list the major points of the article as follows:
First, the criticism of the idea that a “natural” interest rate would really align “time preferences” (as Hoppe phrases it), since individual companies look not to the general demand for credit along the entire economy, but to demand amongst their competitors. Second, the idea that the very concpet of a “natural” interest rate in the first place is rooted in equilibrium theory and the notion of perfect knowledge, both of which Austrianism is supposed to reject. Third, the point that savings are unlikely to be used for investment in the middle of a recession, and are thus adubious answer as to a way out. Fourth, the point that "it is doubtful that even free banking could resist the temptation to create credit money (“The Financial Instability Hypothesis”); and the empirical example of competitive banking in Scotland leading to credit expansion in spite of the presence of bank competition. Fifth, the argument that credit expansion is not a cause, but a component of, speculative booms. (“It is true that all crises have been preceded by a speculatively-enhanced expansion of production and credit. This does not mean, however, that crisis results from speculation and the expansion of credit.The expansion and contraction of credit is a mere symptom of the periodic changes in the business cycle, as the decline of profitability contracts credit just as an increase enlarges it.”)
Maybe this will help
That’s part of the plan… baffle you will bull$h1+.
It’s really not worth my time, but maybe others. (I’m procrastinating on a group assignment) Anyway:
The format is annoying. You click the links, where they state ‘were we previously covered this’ and it’s a fallacy, built on another fallacy and you keep going back, all the premises are wrong.
Here are some gems, that the article you linked is built on:
For anarchists, capitalism is marked by the exploitation of labour by capital. While this is most famously expressed by Proudhon’s “property is theft,” this perspective can be found in all forms of anarchism.
“At its most basic, the class struggle (the resistance to hierarchy in all its forms) is the main cause of the business cycle.”
Wage Slavery. Over production. Under-consumption.
And a few within the specified section:
Yet the government does not force banks to make excessive loans and this is the first, and most obvious, fallacy of argument.
And no-one forced you to drink the fruit punch at the party. But you did, and unbeknown to you - it was spiked (some foriegn agent intervened) you’re now drunk and prone to making bad decisions.
The second option, namely imposing a 100% gold reserve limit for banks is highly interventionist and so not remotely laissez-faire (why should the banking industry be subject to state regulation unlike the rest?) In other words, it seeks to abolish the credit cycle by abolishing credit by making banks keep 100% gold reserves against notes. This, in effect, abolishes banking as an industry.
Non sequitur.
And now.. I’m going to stop now, over it.
And what would their competitors be looking at? Not sure this even makes sense to begin with.
Erm, no. They are referring to the pure rate of interest based on TP, unadultarated in the ERE. The natural rate reflects TP but incorporates other elements too, IIRC. When Hoppe speaks of the NRI he means the market rate. So this is more garbage.
What is a non-“dubious” way out? Spend, spend, spend? Abolish capitalism and install socialism (well too late, the banks are already subjected to it)? This is more hogwash by assertion.
Don’t know what sources they’re using or the specifics of the situation but if consumers want stability they are free to demand 100% reserves. Certainly no need for a monopoly on “regulating” and issuing money.
More rubbish. Credit expansion is the fuel with which the fire that is business cycles burn. Without it there can be no economy-wide price inflation nor contraction. I suppose business just randomly experiences massive clusters of errors based on “animal spirits”, much like explanining a river’s ebb and flow based on a deity residing therein. Please, they should sell this abject nonsense to the credulous who are likely to believe in such superstition. Saying it’s a “symptom” of business cycles means fuck-all, to be blunt. Interest rates are subjected to constant attempts at price control in order to effect monetary injections. In what world and according to which “economist” would this NOT impact the economy? The jokes at “Infoshop”?
The initial response to Kahn’s point is “Your spending doesn’t increase unemployment - it leads to an outcome of higher unemployment than there would have been had you done otherwise - if the waistcoat isn’t your best use of the money.” There’s nothing in the ABCT that condemns all spending - only spending for the sake of spending, or spending that doesn’t improve value over saving.
The ABCT doesn’t claim that interest rate information is all that is needed, simply that it is a component of the decision-making process. Furthermore, the real important claim of ABCT is that transmitting misleading information through the interest rates leads to misallocation of resources. For this, it is not at all necessary that interest rates be the sole source of information.
I do reject the idea of a natural interest rate. However, it is not rooted in the notion of perfect knowledge - one can discuss a metaphysical natural rate without implying an epistemic one. However, the whole idea of divergence of rates strikes me as something Hayek imported from outside, not an essential part of the theory. Many present the theory without it, including Block.
This is just silly. What will they be used for? Does he think that loanable funds will simply sit useless absent government interference? At a 0% rate, there will be borrowers. At a 1% rate, there will be less borrowers, but not 0.
This wouldn’t seem to affect the strict Rothbardians in any event. But even if this is “doubtful” how much more “doubtful” is it that the temptation can be resisted with deposit insurance provided by government, and with bailouts available?
Just how is the “cycle” supposed to explain what makes the expansion take place? Expansion requires an increase in the money supply, which is not provided by a boom period - certainly not by anticipation of a boom time! Credit cannot just expand without someone printing the money.