Typography

1563, Bruegel the Elder "Therefore is the name of it called Babel; because the Lord did there confound the language of all the earth" This post is written for people in 2013 or 2014 who decide to have a debate on the importance (or not) of monetary injection points. This debate already transpired in early December 2012 across multiple blogs. Rather than starting from scratch, here's a bibliography. The debate kicked off with Scott Sumner's response to this article by Sheldon Richman. From then on, in no particular order, are these posts: Scott Sumner It really, really, really doesn’t matter who gets the money first—part 2 You can start talking about Cantillon effects as soon as central banks start buying bananas A voice of reason from the comment section If I buy T-bonds, their price rises. If the Fed buys T-bonds, their price (usually) falls Bob Murphy Scott Sumner and I Have a Failure to Communicate Resolution of the Sumner/Richman Showdown You Might Be Talkin to ...

There's a dustup between market monetarists and Austrians over Cantillon effects . See Nick Rowe, Scott Sumner , Bill Woolsey , and Bob Murphy . What are Cantillon effects? One definition is the effect that a change in the money supply has on the real economy due to where money is injected. Rereading Cantillon, I think its better to define the effect he is writing about as the influence that a change in the money supply has given that people are incapable of anticipating that change. Cantillon wrote in a world in which huge discoveries of gold in the Americas had steadily increased the price level. We know that if people perfectly anticipate the arrival of new gold, all prices will immediately rise. Cantillon thought somewhat differently. According to him, the initial discovery of gold would go unnoticed by people: It is also usually the case that the increase or decrease of money in a state is not perceived because it comes into a state from foreign countries by such imperceptib...

Noah Smith writes a somewhat facile post targeting internet Austrians. They're too easy of a target - and I doubt that thinkers like Mises, Menger, or Hayek would disagree with any of Smith's facts and calculations. They might disagree with the spirit of his post. His post paints a somewhat benign view of inflation. For instance, he pokes fun at the idea that inflation is akin to stealing by pointing out that a large component of the public (those with large debts) actually benefit from inflation. The "inflation as stealing" meme is a very old one that predates Austrian thinkers, as I pointed out in my comment : On a superficial level I agree with you. On a deeper note, the idea that altering the value of money can be equated to stealing is a very old idea that predates Austrian economics, and in attacking Austrians you're also attacking thinkers like Adam Smith, ARJ Turgot, and Richard Cantillon who wrote along similar lines and were reacting to very real circum...