Re: Money, it's a crime...
"Really? No-one gets enriched by lending? What's the purpose of lending then? Is it social altruism perhaps? Do banks not charge interest - always above inflation - in order to extract a profit from lending?"
Bit of a leap there don't you think? He was talking about FRB. You are now talking about lending. You do know that full reserve banking, the opposite of FRB, would still have lending? Good, then we can't define lending as being unique to FRB then, can we?
And of course lending enriches. But we've already agreed that lending and FRB are not the same thing, haven't we? BTW, lending is not always done at rates above inflation. 70s Britian it most certainly wasn't for example.
"Fractional reserve lending contributed - in great part - to the credit derivatives bubble"
No, it didn't.
"subsequent crash of 2008"
Absolutely correct, it did. It's the great weakness of an FRB system, that a bank can be solvent but illiquid....and yet has millions of people all demanding their money back right now. It's also the source of the great value of FRB, which is that a system of FRB performs maturity transformation. It might be that your and my and 5 million other checking accounts have zero in them at the end of the month, but the average balance over the month is maybe £1,000 each and the bank is able to budle up those 5 million £1,000s and then lend them out as long term loans to industry and or mortgages.
As I say, both the point and the weakness of FRB.
"Same for MF Global and Jon Corzine - also of Goldman Sachs. There was no greed at play there."
I actually mention in the piece what happened at MF Global....
"The last time the US government imposed price controls was in the early '70's during the Nixon administration. It had no effect on inflation. Inflation still skyrocketed - mainly because of the oil shocks. Neo-classical Austrians hate that one."
Why would neo-classical Austrians (whoever they are, Austrians are not normally regarded as neo-classicals) hate that one? Both groups say that price controls don't work. Price controls didn't, as you note, work. Why would they hate what they think doesn't work not working?
"During Bush 43's administration, there was no increase in money supply,"
Eh? M2 (Money stock) went from 4,600 billion to 7,500 billion during Bush 43.
"yet there was significant inflation in basic consumer subsistence goods: food and energy."
Food and energy prices did rise, yes.
" Conveniently enough, food and energy prices are excluded from the US inflation calculations."
Not so. Food and energy, being more volatile in price than most other things, are excluded from "core inflation". The actual inflation rate, CPI or whatever, is core inflation plus food and energy.
" Neo-classical Austrians' explanation for food price increases in the US: "we can't explain it. It must have something to do with China and India eating more steak and frites and driving better cars". Seriously."
Not so much. The usual explanation is that some idiot decided to put corn into gas tanks as ethanol rather than into the food chain. Given that corn is the basic raw ingredient of a lot of food (pork as just one example) this raised food prices. Other food prices (wheat etc) also rose as people substituted away from corn.
And even if the China story was right, what's wrong with that? Higher demand for food means food prices rise. You do agree that demand affects prices, yes?
" We can all start our own Berkshire Hathaway, be miraculous investors and we'll all get rich. Right?"
At the end of the article I do sorta point out that no, we can't get rich the Warren Buffett way....