Courtesy of Peter van Coppenolle @ NASOE:
(But they will experience it first hand)
Professor Fekete has been studying and teaching the gold standard for over 40 years now. Unlike most ‘pundits’ Fekete has held a seat at the Winnipeg Commodities Exchange in order to study the gold market from every angle possible. And studying he has done so relentlessly since immigrating to Canada in 1957. He has used all his powers to educate people about gold. Part of that effort was to groom a ‘hard core’ which now, 2013, constitutes the faculty at the New Austrian School of Economics. Over the years we at the faculty have experienced the rewards that only educators can testify to: the joy when other people finally see some light. And sometimes we encounter detractors too. They are an amusing lot, put there for our entertainment, no doubt.
Professor Fekete, dissatisfied with the body of knowledge on economics, has been a writer and above all a supreme philosopher of economics. Ever since 1957, he has amassed so much old and new knowledge, that we at the faculty of NASoE have quipped that ‘if you want to understand nothing at all about the gold standard, you will have to read B. Goldwater.’ We know that is one offensive statement. But we also stand by our own insights, research and above all methodology, which is a Mengerian disequilibrium approach. Using a good compass does make a difference. The world collectively knows that traditional ‘economics science’ is (expletive) dismal, which is stronger than just ‘dismal’. It has reached the stage were this economic discipline’s own academics are mudslinging each other or hubristically refer to themselves as invincible. (E.g. Krugtron the Invincible, a neoplasm born from a bad ’80 movie.) Or in the Austrian camp, the same old boom and bust line is repeated, yet zero research has taken place, until now, either to correct for some untenable assumptions in the Austrian Business Cycle or to advance knowledge on some other aspect of credit collapse. Nor do they bother to dismiss the Quantity Theory of Money, according to which the more money is brought into circulation, the higher prices will go. “More money chasing fewer goods”, etc..
The question described in the title is the one people least understand. Perhaps I am too harsh. People who never attended or never listened to standard economics, have no problems assimilating my message. It becomes harder to grasp for those afflicted with the idea that inflation and deflation are mutually exclusive. They are not, puzzled looks and hurled insults notwithstanding. The term “hyper-deflation” was never coined nor did such a state ever occur in history and it full scope is unknown as yet. But using Mengerian disequilibrium and Aristotelian logic, I can paint the general idea.
Professor Fekete never subscribed to what he called the Quantity Theory of Money. It suffices to point to the very fact that it is possible to have a shortage of money simultaneously with the overworking of the printing presses. The reason why the QTM fails is that money is not one-dimensional. It is in fact two-dimensional. Quantity is one, and the velocity of circulation is the other dimension. Central banks control the quantity of production and the market firmly controls the circulation speed. Continue reading