Introduction to Austrian Economics Videos

Steven Horwitz

FEE has now posted videos from the Introduction to Austrian Economics seminar this past June.  Aside from yours truly talking on "Inflation" and "The Future of Austrian Economics," you'll find talks by Larry White, Paul Cwik, Ivan Pongracic, Gene Callahan, and Dan D'Amico.  Enjoy.

Comments

[Don Lloyd]

Steve,

Unless I'm missing something, the apparent exclusive presentations in a video format is highly unfortunate. IMO,the content would be much more accessible if downloadable mp3 audio files were added, releasing the tether to the computer, and allowing many alternatives for playback.

Regards, Don

[Steve Horwitz]

Don,

In the past, FEE has frequently made "audio only" available with their videos. I suspect it will appear on their site eventually, but I'll pass your request on.

[Steve Horwitz]

Audio only will be forthcoming Don. The weren't officially launching those videos til Monday (I found them and didn't know), so the whole thing should be updated by then.

[Don Lloyd]

Steve,

Thank you, I appreciate your efforts.

Regards, Don

[Gerard D.]

I love these video/podcasts from fee. I first learned about Austrian Economics from these fee materials about a year ago and I have become totally hooked. I think they could do a better job organizing all their material though, but still, I think this is an awesome resource. And if you count me as 'recruit', then perhaps all the effort to put them online has been 'worth it'.

[newfirst]

Steve,

I have made a first pass through the audio mp3 of your lecture on 'Money and Inflation' and I was pleasantly surprised to find that your understanding of the most important adverse effects of moderate increases in the money supply (independent of the definition of inflation)largely agrees with my mine, i.e. microeconomic distortion of relative prices as new money disperses from its source in a step by step manner over time until it has spread throughout the entire economy.

In trying to reconcile this understanding with your policy, I need two additional points cleared up about your concept of monetary equilibrium.

1. If all we say is that monetary equilibrium is the equality of money demand and money supply, we have omitted the most important characteristic of equilibrium, i.e. whether the equilibrium is stable or unstable. A ball subject to the force of gravity can be said to be in equilibrium either at the rounded peak of a hill or at the bottom of a valley. In the first case the equilibrium is unstable and the smallest of disturbances or displacements will cause the ball to roll off the peak of the hill completely. In the second case, the equilibrium is stable and small distrubances or displacements will produce a self-restoring force that will tend to return the ball to the bottom of the valley.

Even if there is no bank to create new money, both the demand for and the supply of money will always be in a state of fluctation, and only instantaneously in a state of equilibrium. We still have the question of whether the equilibrium is stable or unstable. I would certainly suspect that the equilibrium for small displacements is a stable one, but I have no proof for that. Do you have a belief that answers this question?

2. It seems to me that the negative distorting effects on relative prices of an increase in the money supply that works its way through the economy will be largely independent of whether the demand for money is larger, smaller or the same as the supply of money at a given time.

Given both 1. and 2. above, any attempt to artificially change the money supply would seems to have undesireable consequences.

Thanks, Don Lloyd

[Steve Horwitz]

Don,

In response to 1: the argument for free banking is not that it will permanently assure monetary equilibrium, but that it will penalize and correct deviations from it. The demand to hold bank liabilities does fluctuate and a free banking system provides both the signal and the incentive to respond with an appropriate change in supply. So the answer is that *under free banking* the equilibrium is "stable" in your sense of quickly correcting small displacements. This, of course, is not the case under central banking.

2. This was the point of contention in earlier threads about free banking and inflation. The argument is that *warranted* increases in the MS, those that match changes in MD, prevent much more serious distortions from taking place. Plus, under free banking, if those increases in supply are genuinely linked to increases in MD, they serve to keep the market and natural rates aligned, preventing the sort of intertemporal discoordination at the heart of the ABCT.

[newfirst]

Steve,

It strikes me that although your lecture claims that the effects of an increase in the money supply are microeconomic in character, free banking is just as macroeconomic as central banking.

I would expect that the ability of individuals to respond to their own individual demand for money to hold results in a system that will remain near an overall stable equilibrium. While this can result in shifts in the objective exchange value of money if most people are lining up on the same side temporarily, the relative price distortions of a tide of new money washing through the economy will be largely absent.

One problem with both free and central banking is that it is an inherent characteristic of any linear feedback control system that delay can eaaily turn a stable equilibrium into an unstable one, with either ringing or actual oscillation being the result.

Regards, Don Lloyd

[Eric H]

Loving the fact that I can stream these FEE lectures to my Xbox (via a program called Playon). I can watch FEE content on my home TV, along with others -- Mises.org, IdeaChannel, Cato, etc.