david stockman is a genius. he integrates stock analysis, fiscal policy, capital theory, macro theory, and monetary theory into every conversation you hear with him. stockman is essentially the austrian version of m. friedman: please oh god, don’t let this insanely debt-wrought and volatility-prone government-controlled economy kill us (or the government itself kill us, a fortiori). stockman thinks that in the end, the medium of money matters, while milton friedman thought that macro numbers only care about other macro numbers. both can be described as right-minarchists, as far as goals compared to starting points go. obviously they both agree that markets work, do their job, albeit imperfectly like most anyone would (imo incorrectly) assume, and that financial stability is a key goal. however, beyond this, they diverge considerably.
milton did not live in a time where the austrian business cycle theory had so much blatant empirical evidence in the magnitudes he studied and collected data for. even then, he would not have been able to see the forest from the trees, because he was a positivist and thus had to use inductive logic to formulate entire theories while whittling away at them with aggregated empirical evidence. this is where we can credit stockman for having a better understanding of the business cycle. he realizes it is just just a process that occurs under certain conditions, because we can work out the logic of it, and it also matches up to his insights from politics and investing. indeed, stockman, garrison, horwitz, et. al argue that the ABCT makes a lot of sense to those involved in the capital structure’s enhancement, especially those involved in the daily numbers of these things (stocks, finance, management, et cetera).
neither stockman nor friedman would want to see the state collapse. they both would rather see the government’s budget balance in the short term than hack at whatever branch they can find; be that branch taxes or spending or printing; now or in five years or whenever for each, paying whatever amount to whichever or taking more from one to spend on another, et cetera. they both would rather the government be a “banker’s bank” at bare minimum: the sad irony here, despite stockman’s genius, is that he has indeed not refuted central banking using bernanke’s words, or at least not in the way that he thinks. he indeed argues for a central bank, and he in above article, states that he thinks we should have some individual governments control money supplies, instead of having competing private currency.
to stockman’s credit, he thinks our central bank should be tied to a gold standard. friedman thought we should have a floating currency. stockman opposes floating currency and friedman opposed fractional banking (interesting switcheroo there). friedman thought fractional reserve banking just ratchets up inflation and allows banks to rip people off. stockman thinks that the base of the problem is fiat money and that government gets its grip around the economy manipulating crony capitalists and politicians with the help of easy money (just as crony capitalists get influence in washington from the fed’s help as well). this is, insanely, the exact same criticism that friedman and others that appreciate the public-choice school levy against the keynesians and their tactic of fiscally controlled crisis prevention and inflation prevention. however, don’t forget that keynes also advocated interest rate adjustments for sake of regulating the rapidity of the growth of the economy in addition to his fiscal tactics. friedman wanted to smooth out the bumps only using monetary policy.
stockman wants to do neither. but he does not want to see the united states eat shit, and especially not merely because lunatics in congress and in the fed keep thinking they can print and spend forever. it really is a “pipe dream” and a “childish fantasy” as stockman has argued before. friedman also distrusted politicians with money, the deficit, budgets, et cetera. stockman wants to raise taxes to lower the deficit, while adjusting taxes to try to simultaneously increase tax revenue and increase growth (the laffer curve supply-side stuff). friedman would likely have approved of such measures in our time, and liked them in many instances in the past. they both, as any statist does, differ on exactly what they would cut and what they would allow to continue to increase, or try to slow increases in, level out, ad infinitum. the point is this: they want to fine-tune the state and the financial system. they want to see this fucking plywood kayak with 15 gallons of water in it not sink further and bail the damn thing out while plugging a foot-wide hole in the middle of it, all while trying to not get eaten by jaws, rapidly approaching with what looks like a human leg stuck on its tooth.
they both agree we are screwed, but they both think we can somehow save ourselves by getting the state to stop being a dysfunctional mess, get themselves and us out of the red, et cetera. i am arguing that the state is the leaky kayak and jaws is pure, unbridled, economic reality and inevitability, given how we have rigged up our financial and monetary systems. but that is a tangent.
i mentioned earlier that stockman thinks that the idea of printing and spending forever is a load of “pipe dreams.” pipe dreams not just to minarchists of the austrian variety, but moreover, to anarchists, at least of the market-oriented variety, austrian/chicagoan/new-classicist/etc. for certain. we don’t want the government to maintain a full reserve banking system. we don’t want the government to have any reserves. get rid of b.s. like taxes and legal tender laws and these bitches are out of a job. joe salerno is something of a right-greenbacker in the short term, to see inflation decrease, like the inverse of a traditional greenbacker. just go to http://tomwoods.com/podcast/ep-373-how-to-rein-in-the-fed-right-away/. i don’t sit around making this shit up. why on earth would any anarchist, like salerno himself, want congress to control the money supply, via the treasury, of course? salerno claims that the central bank, under control of the congress via the treasury, would be less inflationary than the federal reserve, because he believes that americans wouldn’t stand for political moneyprinting, wherein some alleged accountability lies, but is helpless to stop independent central banking, backed by government interest and planning.
forgive my polemic. i think i am fairly safe in arguing that stockman and friedman would both cringe upon hearing such ideas, no matter their ends, as would most anarchists typical of the capitalist line of thought. this was intended to be a short post so i will just leave you at that. have a nice saturday afternoon.
p.s.: good luck, statists.