6-11-11 Hodgepodge

Saturday, June 11, 2011

Easier than They Say?

Nathan Lewis of Forbes recounts how Germany returned to a gold standard after hyperinflation rendered its currency worthless in the 1920's. He ends his piece with the following claim:

It amuses me today when people invent this, that or another reason why a gold standard system is "impossible." What they usually mean by that is: they don’t know how to do it. You can’t be in a worse position than Germany on Nov. 15, 1923. If it was possible then, it is possible at any time.
On the one hand, I want to credit Lewis for attempting to aid the cause of stable currency with historical data in the vein of winning what I call the "battle of imagination." On the other hand, it bothers me that he mentions, without elaboration or comment, that the first stage of the process was, "effectively render[ing] Germany a military dictatorship." That is a dangerous and unnecessary step, to say the very least.

And I haven't even gotten to the fact that Germany never got rid of its central bank...

Weekend Reading

"Physical or verbal abusers in a marriage, as well as dictators and 'spiritual' gurus on a national scale, can sometimes intimidate bodies to do what minds will never accept. It might even look for a while like it's working, but history has proven again and again that it never lasts." -- Michael Hurd, in "The Down-Side of Control" at DrHurd.com

"All forms of 'gun control,' 'travel control,' or 'health control' are just examples of a broader 'freedom control.' And they are all doomed to fail because at root they are just different ways of government violating our individual rights rather than protecting them." -- Paul Hsieh, in "Dude, Where's My Freedom?" at PajamasMedia

"When times are flush and risk aversion is low, overoptimism leads not only to record towers, but overvalued stock markets as well." -- Jonathan Hoenig, in "What Skyscrapers Say about Markets" at SmartMoney

Even More Controls

As if the parade of controls in Paul Hsieh's piece isn't long or ridiculous enough, there are two more recent ones at OpenMarket.org. One looks bad for e-commerce: "Another bill winding its way through the Senate would allow states to tax companies that have no physical presence inside their borders. I’ve written on similar state-level proposals before. It’s a bad idea."

Comic Relief

I remember seeing a much larger collection of these some time ago, but Mental Floss culled the best: "That Tattoo Doesn't Mean What You Think It Means."

-- CAV


Paul Hsieh, MD said...

Thanks for the link, Gus!

Gus Van Horn said...

You're welcome, Paul.

Mike said...

"On the other hand, it bothers me that he mentions, without elaboration or comment, that the first stage of the process was, 'effectively render[ing] Germany a military dictatorship.'"

It should bother you. Stresemann placed effective executive power for five months in the hands of the head and architect of the Weimar military, Hans von Seeckt, though the titular head of the executive was the Defense Minister. It was I believe a matter of comment at the time that a moderate socialist chancellor established a military dictatorship under the control of a monarchist general, and it symbolizes the Weimar Republic to a nicety: A socialist who accepted the Weimar Republic as the best means of keeping the French and British at bay in cahoots with a monarchist who saw the republic as the best of a bad job; he had refused to put down the pro-monarchist Kapp Putsch and only put down Hitler's Beer Hall Putsch because Hitler wanted to go to war immediately with France, which von Seeckt saw as inopportune.

Peikoff's Ominous Parallels has a lot of good comments about the mischief permitted by the way the Weimar Constitution allowed any of its articles to be abrogated in case of emergency, whatever the hell that might have been, and in general about the fact that the Weimar Republic lasted as long as it did mostly because its enemies hated each other more than they hated it.

"And I haven't even gotten to the fact that Germany never got rid of its central bank..."

Yeah, and it was by means of that central bank that many of the same players in Stresemann's currency stabilization, particularly Hjalmar Schacht, used financial trickery to secretly rearm Germany against the provisions of the Versailles Treaty. In short, Lewis' lessons should be kept strictly delimited by readers and not used in debate unless you know the wider context, the future developments, and the skullduggery going on behind the scenes.

Gus Van Horn said...

The situation, then, was indeed even worse than I'd imagined.

I read OP ages ago, but had forgotten lots of the historical detail, and about the comments Peikoff made. (And I have been too preoccupied lately to look such information up or even to think of doing so.) Thanks for taking the time to mention these.

Inspector said...

Interesting, though, that military dictatorship comes up in the context of a post-debt crisis. Being that it's just the sort of panicked and inappropriate reaction that follows from irresponsible spending and currency devaluation.

It's fascinating how many people see the sort of things that are coming; that they're ushering in, yet they do nothing to change our course. And often work to steer us deeper into it.

The reason being, of course, that their philosophy has so warped their thinking that they can't even conceive of acting otherwise.

It would be darkly hilarious if they weren't dragging so many good people with them. Including, especially, all of *us.*

Gus Van Horn said...

Military dictatorship is also the sort of thing a pragmatist would see as an especially effective way to "do something."