Dr. Richard Ebeling on the Bankers’ War on Your Money and Your Economic Liberty

by Mike Gleason, Money Metals Exchange Mike Gleason: It is my privilege now to welcome in Dr. Richard Ebeling, the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He is the former president of the Foundation for Economic Education and is a well-respected libertarian author. He is a regular contributor to the Daily Bell and Epic Times. And he has written and edited numerous books including the three-volume Selected Writings of Ludwig von Mises. His other works include Austrian Economics and the Political Economy of Freedom. He’s also the co-author and co-editor of In Defense of Capitalism. It’s an honor to have him on with us today. Dr. Ebeling, thanks for taking the time. It’s great to talk with you. Dr. Richard Ebeling: It’s my great pleasure to be with you today. Mike Gleason: I want to get in to some of the specifics of Keynesian Theory versus the Austrian School, as well as other related topics with you in a moment. But first, you’re a real scholar of free markets and most of your research appears to be focused on this. One of the main themes I keep finding in just about all of your work is that government stepping in and trying to manage the monetary supply, manage the economy…i’s perhaps the biggest threat to our liberty, isn’t it? Talk about that. Dr. Richard Ebeling: I think you’re absolutely right, it is. One has to understand is that money has been monopolized by government. The government through our central bank, known as the Federal Reserve, has control basically over the quantity of money that is in the economy and then the financial markets. Through having a wide control over the supply of money, it therefore can manipulate and influence the value of each dollar that is in our pockets. And through financial markets, they can distort interest rates. By increasing the money supply, they can create this illusion that there is more savings in the economy and therefore throw real savings and business investment out of balance, which will generate the distortions that eventually will have to be corrected for. And of course, if they persistently and continuously increase the supply of money and it percolates through the economy as a whole, it inevitably runs the risk of generating rising price inflation, which has its own bag of distortive and harmful effects on you and me. Another way of thinking about this is that central banking is a form of monetary central planning. In the old Soviet Union, for example, they nationalized all the means of production — land, factories and machinery — and centrally planned it through a government agency in Moscow, under the presumption that a handful of people could have the knowledge, wisdom and ability to know how to micromanage and direct all of the diverse activities of the multitudes of people in a society; and to do it better and superior than leaving people alone to freely interact in the competitive markets of supply of demand. RIGHT CLICK DOWNLOAD/LEFT CLICK LISTEN – AUDIO MP3 INTERVIEW HERE>>> Now that failed terribly. They couldn’t make shoes that fit or toothbrushes and the necessary supplies or have food on the table in the old Soviet Union, because of this inability of a handful of people to plan an entire society. Why should we be surprised, analogously, that if the government monopolizes the control and supply of money, hands it to a board of governors of the Federal Reserve, who then presume that they have this knowledge, wisdom and ability like the arrogance of other central planners, that their outcomes will be any better than those that had been in the old Soviet Union. That is the reason why we basically have these cycles of booms and busts, inflation followed by recessions or depressions, because they keep aiming at things that cannot be controlled in this way outside with the market itself, and we are the bearers of all the consequences of their misguided actions. Mike Gleason: Most people today don’t even realize there is more than one school of thought when it comes to economic theory and each of these approaches can have a significant impact on society and on an economy as you just mentioned. This is a subject so central to sound money, debts, the role of government. I’m really excited to have you on to talk about this subject. So before we go any further, give our listeners a short history lesson of both Austrian Economics and how it differs from the Keynesian School. And tell us how the central planners and personally, and virtually all of academia for that matter – a world you live in – came to adopt the latter as the prevailing view to pretty much the exclusion of all others. Dr. Richard Ebeling: The Austrian School of Economics began, not perhaps surprisingly, in Austria in the 1870s with a book written by an Austrian economist named Carl Menger. He generated an entire school of thought. The gist of which is that emphasized in those who followed him in the 20th century most prominently, Ludwig Von Mises and Friedrich A. Hayek, that if we’re going to understand how the social world works, the economy works, we have to begin with those elements that are at the cornerstone of the system and that is the individual. His actions, his choices, his deliberations and how out of the actions and choices of the individual come the interactions of multitudes of people in a market economy that generate supplies and demands, and coordinates the activities of now multitudes of billions of people around the globe. The focus of the Austrians out of this, particularly in Mises and Hayek, has been the need to have a degree of humility to admit that knowledge is imperfect; that information is decentralized; there is no one person or group of people who have all of the knowledge of the world in their head; knowledge is a little bit in your mind, in my mind; how to do things; where to do things; when and for what purpose is to do things. If we’re to use all of these decentralized and dispersed knowledge that exist in the minds of all of us but in no one place, we must figure out an institutional way of bringing that knowledge to bear to benefit not only the possessor of that knowledge, but indirectly, the rest of us as well who can gain things from what he can know and do that we do not. The Austrians emphasized that as the role of the market. In the market, people are able to interact and communicate with each other, inform each other of their supplies and their demands and expressing their supplies and demands through a form of communication, known as the price mechanism. Demanders tell the suppliers what they want and the relative value they place upon what they would want for goods and services of the marketplace by the prices they’re willing to offer and bid for them. Likewise on the other side, producers and suppliers inform consumers, us, the demanding public, what they believe they have the ability and capacity to produce and the relative cost it would take for them to do so for the prices at which they’re offering goods and services to us in the marketplace. Those interactions bring us together and inform and coordinate the actions of multitudes of people. If I can just continue with this for a moment… We talk about a globalized economy and we often have made it almost a cliché that we into the marketplace and it seems that many goods when we turn over the label says “Made in China”. Well China is 10,000 miles away on the other side of the globe. How did multitudes of people in China who are working in factories or as businessmen over there making entrepreneurial business judgments and decisions? How did they know what we want in America as individual consumers? They never meet us. They don’t know who we are. They don’t even know we exist as people. But the prices of the global market inform them what we as consumers want, the value willing to place, the profits that might be made and they’re there for in the wrong self-interest of making a living, adjust and direct their activities to serve our wants and desires on the other half of the globe; just as we do the same in producing products that people in China buy as our means to pay for what we acquire from them. If we think of it that way, this is a miracle of billions of people can interact for cooperative mutual benefit while separated by time and space and not needing to know each other to benefit from all of us can give each other through commerce and trade and buying and selling. Now if we keep that image in our mind, of a system of cooperative exchange in the marketplace in this fashion, then how can we presume that those who talk about planning and regulation and controlling and manipulating by government can have this knowledge and wisdom to do this? They do not. There is this arrogance, this hubris that those who hold political power have somehow powers far beyond those of “mortal men”, to use that phrase from the old Superman TV show. To bend steel with their bare hands, control the course of mighty rivers and the analogous of that to know what should be produced; and what work men should do; and the wages they should be paid; and the prices they should receive; and what industries should be developed; and what technology should be fostered. There is an arrogance and a hubris in there that not only is misguided but limits what we can do as human beings interacting in the marketplace by what those planners can carry in their own mind and arrogantly then direct us to do. That is the Austrian approach. We must not have a pretense of knowledge to allow people the freedom to be free as human beings. All of us want to be free to set our own goals, to decide the best ways to achieve the happiness in our life and then through that means, for us all to share in our knowledge and abilities to the free exchanges of the marketplace. Now the opposite of this emerged in the second half of the 19th century and in the early decades of the 20th century. And this was collectivism, socialism. Those who believe that the market fails, it doesn’t distribute income justly, the right things are not produced that people should “really want and which would be good for society”. If these people could only be put in charge, they could arrange things that would be fair, just and what would create a “better world” for everyone, even if the people in that world are not intelligent enough to realize what they would want. Is it they were smart as the socials planners want to make it for them? Continue Reading>>> RIGHT CLICK TO DOWNLOAD/LEFT CLICK LISTEN – AUDIO MP3 INTERVIEW HERE>>>

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