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« Sweden Calling --- Lin Ostrom Phone Interview After Awarded Nobel | Main | Peer Review and Climate-Gate »


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I'd like to get Pete's thoughts on peer review, "The Republic of Science" and the guild structure of the academy in light of Climategate and the release of the confidential hard drives at the Climate Research Unit at the University of East Anglia -- and in light of the fact that much of the best "peer review" in climate science is being done by a retired businessman on a blog out of Canada, peer review which is causing major research group after major research group to correct deep errors in their scientific data, modeling, and statistical technique (errors also discovered and revealed by a host of other "amateur" researchers working outside of their own fields, most especially massive statistical errors based on fundamental failures of statistical understanding.)

I'd also like Pete's thoughts on this in light of Paul Krugman's testimony of the fact that what has been going on within "science" at the CRU at East Anglia is exactly the behavior Krugman sees going on every day "economic science".

I can't speak for Pete, Greg, but I'll answer your request with a question:

Do you give up on markets every time some entrepreneur is exposed as engaging in fraudulent practices or trying to manipulate their market?

What happened at CRU absolutely violates the accepted standards of science, both in terms of the lack of transparency in the data and the peer review shenanigans. Does it happen elsewhere in science and social science? Of course, just like fraud and manipulation do in the market. Until you or anyone else has a better process, we can still acknowledge that the imperfect systems of peer review and competition are the best we have.

Funny that you would seem to be making something like a Nirvana fallacy argument.

Although Dowd claims that "we definitely don’t want loose monetary policy," that's exactly what he would get with free banking.

The definition of "loose money" ought to be an excess supply of money relative to demand, and a free banking system would seem to have a propensity to move away from both loose and tight money by this definition. However, if by "loose money" one means merely an expansion of the money supply (like currency and deposits), then free banking would sometimes be be loose and other times be tight. In the economic conditions following the 2008 calamity, it seems to me that free banks would be stepping up their issuance of currency and credit, i.e. be expanding the money supply.


Under free banking, there's a link between the supply of bank liabilities and the money supply; the former adjusts to the demand for bank liabilities just as the supply of money adjusts to the demand for it. So under free banking, the supply of money would be market determined, and would tend to the right level.
You're right that free banks would have increased the supply of money and credit, in response to greater demand.

The cumulative process, which leads to the business cycle, would be much less likely to occur under free banking, as interest rates would be determined by the supply and demand for loanable funds.
Bye bye, Comrade Ben!

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