Nelson Hultberg and Another New Third Party

http://thedailybell.com/2114/Nelson-Hultberg-Political-Pygmies-and-Mad-Hatters.html

Posted by Bionic Mosquito on 4/20/2011 10:51:04 AM

"What has been taking place in the American political arena for the past six decades is one of the most blatant spectacles of self-delusion in American history."

Very well said.

"Yet the nefarious destruction descending upon our country had its beginning in 1913. That was the year that brought us the Federal Reserve and the income tax, which brought us the false boom times of the 1920s, which brought us the necessity to extinguish the inflationary fires with the Great Deflation of the 1930s, which brought us FDR's welfare-state."

A far better conclusion than is propagated by others on these pages. Personally, I think the big knee-bend on the chart occurred in 1865, when the last real possibility of check-and-balance on the federal leviathan was utterly destructed in Lincoln's effort to preserve the union under all circumstances. What a criminal objective, and what a horrible outcome for us all, and more so for the 600,000 who died for such an objective.

However, all of this was made possible beginning in Philadelphia in 1787, if one is looking for the roots.


From the video, the party platform:

1) A 10% flat tax.
2) The Fed to inflate at 4% per year, with someday decades from now a return to a gold standard.

Sorry, Nelson you lost my vote....

Please, spend your time educating the American people on the true nature of the problems, and the more appropriate solutions. There will be no solution via a third party; there will be no solution via politics as we know it today. But people will look for solutions when these current promises break. Your efforts in properly educating them will make for a better outcome when that day arrives.

Posted by Bionic Mosquito on 4/20/2011 2:49:31 PM

@Nelson Hultberg

It is always a treat when the author of the editorial contributes to the further dialogue. Thank you for this.

There are two main evils that, if continued, will ensure that incrementalism in the direction you desire will never work. One is the public funding of education; the other is the Federal Reserve System: the demise of either one will likely secure the demise of the other. You ignore the one, and support the latter. That you ridicule libertarians for pointing this out suggests you understand little about levers of control over the population.

If you do not destroy these two pillars, it matters little what else you campaign on. Maintain these two pillars, and nothing much will change in America. That you suggest to people that there will be change absent dealing with these two subjects properly reveals a significant shortcoming on your part regarding understanding politics and money power.

I advocate for education. To the extent you or anyone provides proper education, even if through politics, you have my good wishes. The important issues will not be "won" via a vote of an ignorant population, but only when the population is properly educated.

You offer a platform no different than things I have heard from varying politicians and economists over my lifetime. Flat tax has been discussed forever; yet the tax code only grows. The Chicago School always taught that a Federal reserve could be controlled; yet how will such a powerful entity be controlled the next time the end of the world is declared by your Treasury Secretary?

"But be fully aware that you are doing your country and the cause of freedom no good."

Please save your lectures. Over the last few years, a very radical libertarian has become a most recognizable political face to Americans. For the last two years, he was probably the second most recognized congressman, after Pelosi. Today, I would guess more people know of him than Boehner. He wrote a book "Abolish the Fed." Yet with this "radical" background, millions pay attention to his every word. Most of these same millions were sound asleep even three years ago.

Now, do I think Ron Paul has been a success in passing legislation? Obviously, no. But no "victor" of political office has done more to change the dialogue in the right direction in this country in the last 50 years than Ron Paul has. The main objective should be to expand this dialogue, to bring more people in to understand it.

Instead of piling abuse on the working poor, as you did in your editorial, and then doubled-down in your reply to WorkingClass, teach them about the costs to them of the current system. Teach them that the reason they cannot get ahead is because of the tax system and the fiat dollar.

Make the Federal Reserve their enemy; it won't be difficult to do. When the average everyday Joe has the scales lifted from his eyes (and he will, as the governmental promises are broken), he will be quite angry. And you suggest you will pacify him by advocating that you know how to manage the same beasts that caused his destruction in the first place?

They might be working class poor, but they aren't stupid; they will not be so easily fooled. And you would have done your country and the cause of freedom no good.

Posted by Bionic Mosquito on 4/20/2011 4:23:53 PM

@Nelson Hultberg

I thank and applaud you for remaining engaged in the dialogue.

"This could be done tomorrow simply by passing a law mandating that the Fed can expand the money supply at no more than 4% annually, i.e., at the same rate that goods and services grow. Voila! No more inflation. Zero percent every year."

The law won't pass. Or it will pass with one thousand loopholes. Or it will be violated the first time someone screams that the world will end. History of politics proves this is so. What do you know to counter this unassailable fact?

Inflation will not be zero. The distortions may or may not be reflected in the prices. First recipients will still get the jump on the poor saps.

"What's more, this could be explained and sold to American voters very easily."

By the time you get done explaining any of this to them in a manner that results in true understanding, they will wonder why you are advocating keeping any part of the Fed in the first place.

"Getting rid of the Fed is going to take 30-40 years."

Do you really believe your 4% law will survive politics for 40 years? In any case, I think the Fed will die of its own accord much sooner. Absent proper education in the people, those in power will stick it to them anyway with whatever comes next.

"In addition our candidate will sound like "that crazy ol' Harry Browne" who wanted to get rid of the welfare state."

Actually, this is how you came across to WorkingClass and Bluebird, and I will say these are two of the more rational, well spoken individuals of just the ilk you will need to convince. All you have done here is scare them, or at least get them quite upset with you. Scared or upset, either way they won't make good supporters of your cause.

"And even Ron Paul got only 7% with that approach....But no, radical libertarians prefer obscurity and 1% of the vote."

Now it can't be both 1% and 7%, can it?

From 1% to 7% in one election cycle, and before the obviousness of both the catastrophe and cronyism was known to a large portion of society. What might be possible with the continuation of this economic mess? And it is sure to continue and we are sure to see worse.

You recognize this fact about Ron Paul, and yet you don't see the big picture. When I heard he was running (again) three years ago, I shrugged my shoulders with a "so what." Then I saw the first money bomb. Stunning, especially for an oldster like me who recalls fondly pulling the lever for Ron 20 years earlier. He reached such levels of success before the full extent of the catastrophe was even hinted at.

Yet, you advocate continuing to give power to the same people who brought on this destruction. The people will look at you like you just came from Mars when you peddle this witch's brew ("I will manage these monsters better") in the middle of the crisis.

You believe incrementalism in the "right" direction can be had, with all of the same tools of manipulation in place. I will say again, you understand nothing of politics and money power when such levers and tools are available.

"Geeesh! What a brilliant strategy to save America."

Yes, indeed...If America is to be saved with a central bank, fiat money, the obligation of taxpayers to self-report every financial detail of their lives, public education (which you do not mention) all remaining in place, then you have saved nothing. All the same levers of control and centralization will remain. Meet the new boss, same as the old boss.

The Myth of Japan's Lost Decades

This is a myth that keeps on giving. It seems helpful in the mainstream to maintain this myth. Please see the attached for a nice exposition, as well as links to further charts and analysis on the subject:

http://mises.org/daily/5170/The-Myth-of-Japans-Lost-Decades

A couple of takeaways:

1) The myth arises from a view of Japan's flat GDP.

2) GDP is a poor statistic for measuring growth in an economy. For example, it relies heavily on the use of a deflator. There is not (likely) a more manipulated statistic (and impossible to measure in any case) in economics than that measuring price inflation.

Japan has not inflated its currency. Japan has not experienced decades of deflation. While the banks have been propped up (with the expected negative impacts), Japan has not otherwise been "lost." The linked article captures this quite well. I certainly cannot further elaborate.

More (sur) real bills

http://thedailybell.com/2060/Shrinking-Greatness-of-Congressional-Budget-Cuts.html

Posted by Bionic Mosquito on 4/13/2011 5:39:57 PM

@Ingo Bischoff

Apparently you are referring to a dialogue from some other thread, as I see nothing of the history here. Could you reference this please?

Now, on to this comment:

"...referring to Real Bills as credit instruments is either willfully mistating a fact or it is ignorance of the fact."

The supplier of raw material, who cannot otherwise sell his goods because of the lack/shortage of gold (ability to pay) of the next level producer, sells the raw material based upon a real bill. This is credit; you may call it whatever you want, but you will continue to be wrong.

The baker says to the miller: "I have no money, but I want your goods. Please give them to me. You will get paid later." This is credit. And as Fekete says that the source of commercial credit is not savings, but production, he is an inflationist and an advocate of funny money.

"Dr. Fekete's point is that Fed banks have to present actual FRNs in the form of Treasury paper to the Fed Agent to receive "credit"."

Check the Fed's balance sheet. There is every kind of garbage on it, almost to the exclusion of Treasury paper. If the Fed wanted to buy my 1964 VW Beetle, they could do it. Prove me wrong. Your assertion is stunning given the reality.

"The law does not allow the Federal Reserve banks to purchase Treasury paper directly from the U.S. Treasury because that would make money creation through the Federal Reserve banks a charade, reserve requirements a farce, and the dollar a sham."

While technically the Fed buys in the secondary market, when the primary market KNOWS the Fed will buy $600 billion of paper, and the Fed announces it as such, your distinction is meaningless in economic terms. I assure you, the banks understand the game.

"These comments by Dr. Fekete can best be understood by reading the statement made by George R. James, member of the Federal Reserve Board before the U.S. Senate hearing on the Banking Act chaired by Senator Glass in 1935."

I appreciate your grasp of the history of these institutions. However, your continued reliance on statements and statutes from 80 years ago is baffling. We see what the Fed is. It seemed obvious to many in 1913 what the Fed would become. That Fekete's statements can be understood by understanding a world that ceased to exist decades ago (if it ever existed at all) makes the statements rather unimportant in understanding the truth of the system today, setting aside the numerous economic fallacies contained in his statements.

Posted by Bionic Mosquito on 4/13/2011 9:22:05 PM

@Ingo Bischoff

My neighbor (call him Joe) owns a donkey. He insists it is a thoroughbred. Now, in our neighborhood, their are many farms that raise thoroughbreds, so we know one when we see one. Joe's donkey is no thoroughbred.

But Joe's brother-in-law (Frank) sits on the town council. Frank got tired listening to Joe complain at every family gathering about his so-called thoroughbred being called a donkey. So Frank had the town council pass a law. Joe's donkey was now a thoroughbred, by law. Except everyone knew it was a donkey.

"What in fact happens is that the miller says to the baker: "I am offering you my flower so you can produce bread, IF YOU PAY ME WITHIN 90 DAYS [emphasis added]. I know you will sell the bread since people must eat. I have no doubt, nor will any subsequent holder of this Real Bill, that you will pay on maturity. Please sign here.""

Ingo, once again, using your own words as my evidence, it is clear that real bills are credit. To pay in 90 days, instead of on delivery, is credit. That someone passed some law that defines or governs bills of exchange does not change the economic reality; this is credit.

You are trying to peddle your donkey as a thoroughbred. Just because Frank passed a law doesn't change the nature of the donkey.

"Dr. Fekete understands this, and I understand this."

That you and Fekete understand this says more about cognitive dissonance than it does about your (or his) understanding of economics. Your explanations give away the reality that Real Bills are another promise of pixie dust: wealth from nothing, the same voodoo sold by Ben Bernanke.

Posted by Bionic Mosquito on 4/14/2011 8:26:25 AM

@Ingo Bischoff

I make no assumption about who is wealthier, the baker or the miller. Wealthy individuals, even cash-rich individuals, utilize credit in their business dealings. That they may not require credit makes it no less credit. Why do you introduce a strawman?

You and Fekete are peddling a donkey but calling it a thoroughbred. In your case, the reason seems to be because bills of exchange are governed by "law X" while commercial credit is governed by "law Y." This may offer a legal distinction, but there is no economic or monetary distinction.

As to there being a difference of interest charged as opposed to taking a discount on a note, economically there is none.

Exchanging goods for final payment (final payment requiring money, not a money substitute) to be made at some future date is credit. Interest charged or taking a discount is economically identical. It requires lawyers to come up with different methods and means to complicate the matter. To the businessman, the net result in the cash flows are identical.

That some might prefer taking a discount on a bill of exchange as opposed to utilizing interest in a conventional note does not matter. This is what makes a market.

Posted by Bionic Mosquito on 4/14/2011 2:39:10 PM

@Dave Jr

"Monetary inflation is moot."

This is incorrect. It always results in misallocation of resources, and therefor a) overall wealth destruction and b) a transfer of wealth toward the first recipients of the inflated money supply. It is true with real bills, as resources are taken from consumers and savers in favor of producers.

"Price inflation is what matters."

This, of course, is also the defense claimed by central bankers. "Watch price inflation [a thing impossible to measure] and ignore the theft going on via debasement of the money supply." As to real bills and price inflation, there is no doubt that with real bills prices are higher than they would have been absent real bills, as inherently demand would be lower.

Your words are the words of those supportive of central banking and fiat money. To the extent you speak knowledgeably regarding real bills, you demonstrate that the philosophy underlying central banking is the same philosophy underlying real bills.

Government and Retirement Plans

http://thedailybell.com/2019/Tibor-Machan-The-Story-of-Entitlement-Addiction.html


Posted by Bionic Mosquito on 4/10/2011 7:56:58 PM

@Jeannie Queenie

"I am not a NON productive citizen as a retiree.... I DID MY JOB AND A DAMN GOOD ONE"

When I use the term "non productive" I use it in a quite value-neutral manner. A productive person produces goods and services desired in a free market. A non productive person does not.

So non productive can include individuals for whom being productive is not an option, due to some physical or mental shortcoming. It can include someone who is no longer active in a productive capacity, after a lifetime of being tremendously productive. I make no negative statement regarding such people.

On the other end of the spectrum, non productive can include professions that would not exist, or to nowhere near the extent they currently exist, absent the coercion of the state: military personnel, defense contractors, university professors, lawyers, most government positions, etc., are some examples.

Or professions that would exist without the state, but without the excessive compensation made available only due to state involvement: the most egregious example is what passes today for bankers. But you could include lobbyists as another example.

So, by my definition, retirees are, at least to a large extent, non productive. There is nothing wrong with this, as long as they saved over a lifetime (or are supported by family) and do not demand sustenance via coercion.

Non productive as I define it is value neutral. The number of people producing goods and services desired in a free market is shrinking, or not growing as fast, as the number of non productive people that are not producing such goods and services.

So no need to yell at me!

"Are you saying that most boomers are so bereft in brains that they will just lay down and play dead after putting monies into their 401Ks for 10, 20, 30 and even 45 years...."

They will volunteer the next time the stock market falls by 50% or more, and the government offers the chance to come in to the government endorsed investment option at your previous high-water mark.

Start with defined benefit pension plans. These are administered by boards with a fiduciary duty. A typical plan might have hundreds of millions to hundreds of billions in assets. With the next market correction, they will lose half the value. Now the government says: "give us the assets, and we will credit your beneficiaries with the high water mark as the coming in position." As a board member with fiduciary duty and potentially personal liability for taking the "wrong" decision, how would you respond? If they give the assets to the government, there is no way they will be held liable for the decision in a government court. But if they don't? How will they defend themselves in those same courts? They did not take advantage of making the beneficiaries whole? A no-brainer for these board members. They will hand the assets (and obligations) to the government

Now, as an individual with a 401K or an IRA, how would you respond? Three years from retirement, and your assets fell from $500K to $200K. Or, five years into retirement? The government will give you credit for $500K, the previous high water mark.

Most will convert voluntarily. It will buy a few years time for the state, once again delaying the required bust, and ensuring it will be even larger.

Jim Rogers at The Daily Bell

http://tinyurl.com/3d45dq2

Or go to search The Daily Bell site, at: http://www.thedailybell.com/index.asp

JR: [On central planning in China] Centralized planning is rarely, if ever, good for the economy. But the kind of construction you are describing is at the provincial level – not the national level.

BM: The provinces are larger than most countries. This is “central” enough, and I am certain Jim Rogers understands this. Perhaps he is sending a message: don’t look at China as one; don’t look at all of the problems as country-wide, you must understand each province, each district, if you want to invest wisely in China.

JR: [On civil and social unrest] There is going to be more social unrest worldwide including the US. More governments will fall. More countries will fail.

BM: It is a dangerous balancing act that the elite play. Unrest may help them bring in desired change, but how to manage a few billion upset people? Talk about herding cats! This unrest can backfire just as easily as it can work to the elite’s benefit. Perhaps the size of the gamble suggests something about the desperate position the elite’s find themselves in.

JR: [On Europe and the Euro] I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries….

BM: Either lose on the currency or lose on the bonds; this choice must be made. In the end they will take haircuts on the bonds. The currency is too big a tool for control for the elite. To lose it only to usher in something bigger, the SDR? Much easier to build on the foundation of large states as opposed to smaller states, especially after a failed experiment of a common currency. If that is the gamble, it only again demonstrates the level of desperation.

JR: [On the Tea Party in the US] We still haven't seen much action.

BM: Yes we have. They extended every draconian position of the Patriot Act, if my understanding is correct. If Americans believe they can change the system through politics (just play along with me for a moment, as there is no answer in politics as it stands today), vote them ALL out at the same time, and only vote in third parties. Repeat every two years. That will make it fun for a while.

JR: [On continuing American wars and empire] Why are we supporting the guy in Yemen and not the guy in Libya? I can see absolutely no intellectual, philosophical, or even political justification for what we are doing.

BM: I read that the US gave Saudi the OK to go into Bahrain in exchange for Arab League support on Libya. Such is political justification these days.

JR: I don't know there's more military tension between China and the US these days.

BM: Yes, the US believes the western Pacific (including Taiwan) is US territory, China believes otherwise.

JR: Politicians may be railing more and more about China, but that's a verbal encirclement of China, not a military one.

BM: But isn’t this how it always starts?

JR: [On the IMF replacing the dollar with the SDR as reserve currency] I can see if something dramatic happened tomorrow or if people are desperate, but I don't see SDRs working at all.

BM: Is this a hint, where Rogers knows more than he is willing to say? The elite are likely rather desperate. Although he is right, the SDR won’t work any better than any other fiat currency. Just more pain for us little people in the meantime.

JR: [On Bernanke purposely trying to ruin the dollar such that the IMF can usher in a new world currency] That's a conspiracy theory that assumes these people could work together. No, he actually believes in what he is doing and he believes he's going to save us all.

BM: That Bernanke is a true believer in his models and capabilities I have no doubt. This doesn’t negate the possibility that there is an attempt to purposely ruin a currency. Knowing what Bernanke believes about monetary policy, wouldn’t you choose him as the key central banker if you wanted to ruin a currency?

JR: But I would hope that everybody takes out some kind of insurance policy for their money

BM: This is all that gold is. Don’t plan on getting rich off of it, and pray that it returns in price to a few hundred dollars an ounce; a sign of return to some stable money. Like fire insurance on your house, you don’t desire that your house burns down such that you can feel like you got value for your insurance policy; and you don’t feel wealthier if your house is destroyed. Yet, each year, when it doesn’t burn down, you renew the policy anyway.

DB: The remonstrations show something specific about the man and his character. Jim Rogers is someone who will patiently sit through interview after interview (he says he's been giving too many of them) and express informed opinions on any one of a number of topics. This generosity can fool you into thinking you are speaking to an amiable, even low-key gent, and not one of the sharpest most successful investors alive today.

BM: This struck me throughout the interview. Then I thought about how he appears on the TV and YouTube interviews. He says the same words; yet they do not come out sounding so blunt when heard in that southern drawl. Conversely, on the TV interviews, the pleasant southern drawl and demeanor tend to hide the fact that his is a very sharp mind; something that came across quite strongly in this DB interview. Altogether, the same man saying the same words, yet two very different perceptions on my part depending on if it is live TV or the printed word. This DB interview added depth to my view of Jim Rogers.

Mises and Gresham's Law

Again, quoted passages are from Human Action Chapter 17 section 12.

Gresham's Law is often stated: bad money drives out good. This is incomplete, and an incomplete statement of Gresham's Law. It is more accurately stated: Bad money drives out good if their exchange rate is set by law.

If different "money" is free to trade, without any hindrance from legal tender laws, tax preferences, etc., bad money will not drive out good, nor necessarily will good money drive out bad. Different "monies" will find their value in the market, and will trade. Period.

However, if one money is protected by legal tender, and the valuation is fixed by government, then yes, the bad money will drive out the good. All will get rid of the over-valued (by government decree) money, as it MUST be accepted by the counter-party, and accepted at a value higher than the market would determine.

Mises addresses this idea as follows:

"If, however, the things concerned are not money-substitutes and are traded at a discount below their face value, the assignment of legal tender quality is tantamount to an authoritarian price ceiling, the fixing of a maximum price for gold and foreign exchange and of a minimum price for the things which are no longer money-substitutes but either credit money or fiat money. Then the effects appear which Gresham's Law describes."

If, by decree, the "thing" that is no longer a money substitute must be accepted not at the discounted value of the market, but at the inflated value of the decree. This money will always be spent first, and it will drive the truly "good" money out of circulation. Why would someone spend a 100 cent dollar when a 90 cent dollar must be accepted by the counter-party at 100 cents? Bad money will drive out good money.

Mises then addresses what would happen in a free banking environment, where competing currencies trade freely without legal tender. In fact, he is for the more the merrier, as in the following:

"However, freedom in the issuance of banknotes would have narrowed down the use of banknotes considerably if it had not entirely suppressed it. It was this idea which Cernuschi advanced in the hearings of the French Banking Inquiry on October 24, 1865: "I believe that what is called freedom of banking would result in a total suppression of banknotes in France. I want to give everybody the right to issue banknotes so that nobody should take any banknotes any longer."

He proposes that the good money will drive out the bad. In a freely competitive environment, where multiple banknotes would be issued, he sees the entire concept of banknotes disappearing, in favor, presumably, of good coin.

I think this will be true for the absolutely worst banknotes. However, it strikes me that most will continue to trade, but not at face value. Perhaps this is what Mises is getting at with the following:

"But if any doubts exist concerning their prime character, people will hurry to get rid of them as soon as possible. They will keep in their cash holdings money and such money-substitutes as they consider perfectly safe and will dispose of the suspect banknotes."

For safety, people will keep the most secure notes, the notes issued by banks with the best reputation. They will preferably spend the suspect notes, or more likely take them to the issuing bank for 100 per cent redemption.

Such will be the check on any bank, and this I return full circle to Mises and free-banking. He sees the market perfectly capable of "policing" if you will, the various banks participating in the market. Once the reputation of a bank is in question, notes will be brought to the bank to be redeemed. Unless the bank is acting properly in its reserves, it will soon find itself depleted. The end comes quickly when the reputation is in question.

Mises and Real Bills

As might be obvious from several of my posts here, I enjoy a robust discussion about Real Bills / Bills of Exchange. Mises addresses this topic in this section of Human Action (Chapter 17, section 12).

"The notion of "normal” credit expansion is absurd. Issuance of additional fiduciary media, no matter what its quantity may be, always sets in motion those changes in the price structure the description of which is the task of the theory of the trade cycle."

Mises makes the statement that there is no such thing as a "normal" credit expansion. This statement strikes me to mean that there is no "rule" that can be applied to money supply growth; no standard increase that can be viewed as normal. No Taylor rule. No Milton Friedman acceptable range of 3% to 5% per year.

Inherently, this must be so. There is no formula that can better determine the necessary supply of money and credit better than the market can. The market determines appropriate supply and demand for countless products, most of which are far more complex than the "product" of money and credit. Why is it that somehow credit is too difficult to be left to market forces, when it is nothing more complex than one actor with excess savings making his savings available to another who requires credit.

"The Banking School taught that an over issuance of banknotes is impossible if the bank limits its business to the granting of short-term loans. When the loan is paid back at maturity, the banknotes return to the bank and thus disappear from the market."

From what I understand from proponents of Real Bills, the over issuance is not impossible; banks can over issue notes, but will soon be disciplined by the market when it becomes clear that this is the practice, or when the notes cannot be redeemed.

"However, this happens only if the bank restricts the amount of credits granted. (But even then it would not undo the effects of its previous credit expansion. It would merely add to it the effects of a later credit contraction.)"

Here Mises recognizes that the bank must remain disciplined in its issuance of notes. The more important point is in the second sentence. Proponents of Real Bills do not see inflation because they state the notes are redeemed within a short period; in the case of Real Bills, 90 days.

Mises makes the point that expansion is expansion. The negative ramifications of expansion may be limited, due to the short time window, but it is still expansion, with all of the potential distortions this will cause.

"The regular course of affairs is that the bank replaces the bills expired and paid back by discounting new bills of exchange. Then to the amount of banknotes withdrawn from the market by the repayment of the earlier loan there corresponds an amount of newly issued banknotes."

But it is worse. The individual notes may disappear in 90 days, but the expansion does not end. Redeemed notes are replaced with new notes; this, the expansion is permanent.

In these few sentences, Mises lays bare what should be obvious to all about Real Bills. They are expansionary to the money supply and credit. The expansion, even if of a limited duration, will result in all the negative consequences of any credit expansion. Further, the expansion is not limited, and redeemed bills are constantly replaced by newly issued notes.

I go into much greater detail about these criticisms in many of my previous posts at this site. I feel it would be redundant to go further in this post reviewing the work of Mises. For those interested, look under labels for Fekete or real bills.

I am pleased that Mises agrees with me!