Utopia, you are standing in it!

by Arash Molavi Vasséi

In a previous post, Andreas refers to George Selgin’s recent discussion of the place of fractional reserve banking in the Austrian Business Cycle Theory (ABCT). There, Selgin takes a swipe at the monetary pillar of the ABCT. According to the Austrian model, fractional reserve banking is inclined to create money out of “thin air” and, therewith, admits investment spending in excess of “voluntary saving”. This imbalance, allegedly induced by a decline in reserve ratios, is reflected in a Wicksellian interest rate gap, which is supposed to impact prices and the allocation in a systematic way (the real pillar of the ABCT). Selgin argues that fractional reserve banking does not account for the Austrian business cycle, and Andreas expresses sympathy for this view.

(Update: Following Scott Fullwiler’s comment, I published an update here, in which I provide extra clarifications and introduce what I see as the fallacy of composition of the endogenous money theory (I moved this update to the top of my post following a few questions I received).)

Today will be a little long and technical… Many people have heard of the classic textbook story of the banking money multiplier, a characteristic of fractional reserve banking systems. Banks obtain reserves (i.e. central bank-issued high-powered money – HPM, which forms the monetary base) as customers deposit their money in, then lend out a fraction of those deposits that gets redeposited at another bank, effectively creating money in the process, and so on. In fine, reserve requirements at central banks prevent banks from expanding lending (and hence money supply) beyond a certain point. This led to the view that banks’ expansion…

As Steve Pinker discusses in his new book, The Sense of Style, the use of “his” or “her” when writing about general situations can be tricky. For example, using only the masculine form in sentences like “A scientist shouldn’t invariably put his name on papers that come from his lab,” does marginalize women, and I can see how that would irritate the many women who are scientists—or readers. Times have changed, and it’s a form of sexism to always use “his”, which ignores half the population.

My own solution has been to alternate between “him” and “her” or “his” and “hers”, so that nobody gets left out. Or you can use “his/her”  or “his or her”, but that is a bit awkward.  But for many that’s still not a good solution, as it leaves out people who don’t identify as either male or female. Granted, that’s a small minority of people, but the “his/her”…

h/t SG

The December 22^nd edition of the BBC World Service radio programme ‘Boston Calling’ – titled “The allegiance edition” – included an item (from 08:56 here) described in its synopsis as follows:

“Also, we look into President Trump’s latest executive order, which relies on a controversial definition of anti-Semitism…” [emphasis added]

The working definition of antisemitism which the BBC World Service found fit to portray as “controversial” is that produced by the International Holocaust Remembrance Alliance (IHRA) which has been adopted by governments and bodies around the world.

Presenter Carol Hills (of PRI) chose to introduce the item with an unexplained reference to ‘allegiance’ which might well be considered inappropriate given the subject matter of antisemitism.

[emphasis in italics in the original, emphasis in bold added]

Hills: “In these divided times there are still some things we agree on. Few people, for…