bookreview: JK Galbraith’s Money: Whence it came, where it went

Money: Whence It Came, Where It WentMoney: Whence It Came, Where It Went by John Kenneth Galbraith
My rating: 4 of 5 stars

-p.8 –Finally! A reputable/academic/economist citing del Mar: (2) Alexander Del Mar, History of Monetary Systems (London: Effingham Wilson, 1895; New York: Augustus M. Kelley, 1969), pp. 1-2.’

…’In time it would be asserted that the debauchment of the currency caused the downfall of Rome. This historiography – the tendency to attach vast adverse consequences to monetary behaviour of which the observer happens to disapprove – is one which we will find frequently to recur. It should, needless to say, be regarded with the utmost suspicion.”‘
-I still agree with delMar and Keynes that the coincidence is too much to be accidental.

…'”Though willing to have banks for the purpose of deposit, Thomas Jefferson strongly opposed their issue of notes. Writing to John Taylor in 1816, he agreed that banking establishments were more to be feared than standing armies.”‘
–I have yet to find the full source for this in the Jefferson Archives (UVA), despite seeing it quoted widely as authoritative.

…”Most dangerous of all would be democracy. …none forsaw that farmers and workers would one day have the power that would make governments unwilling to impose these hardships even in so righteous a cause as defence of the currency. …the interests of the rich in these mattes could differ from those of others.”
–I contend that democracy (if $ is distributed fairly) is not a danger to fiscal discipline.

…quotes Ricardo: “He [the farmer], more than any other class of the community is benefited by the depreciation of money, and injured by the increase of its value.(20)”
—presumably by the higher ratio of land value to coin/money value? Back to H. George again…

p.53 Maj. CH Douglass predated by MD colony in issuing cit. div. (worked very well); p. 56 The Land Bank Manufactury Co. bank notes outlawed retroactively from London under the Bubble Acts; ended colonial banks

p. 60 gold == morality
p. 66 assignats backed by land worked until not backed at all… (financed Fr. Rev.)
p. 70 US Bank Finan. war (Am. Rev.) but w/hyperinflation (too bad, imnsho, that “the notes of the bank went out to a borrower at an interest rate that duly and directly rewarded the owners of the bank.”)
p. 80 re: The Money War Ch. 7: led up 2??? (on Bank paying off members of Congress to vote or make nice speeches about certain things…)
p. 94 “hard money morality”
p. 102 ‘Gilded Age’: gold==univ. money system
p. 105 #3 (Hildreth, ‘Banks, Banking, and Paper Currencies’ Boston: 1840 in Samuel Rezneck Business, Depressions and Financial Panics NY:Greenwood Pub. 1968): speculation good when succeeds, crime only if fails
P. 109 be happy and the money will follow (confidence==self-fulfilling proph.)

P. 111 a bank failure: 1. Hurts ppl w/$ in that bank, and also: 2. hurts (reduces and tightens simult.) the money supply overall

P. 117 #3(Samuelson, pp 272-273): Fed. Res. Open Mkt Com: ‘most powerful group of private citizens in America’; FDIC;
P.118 ref.#5: Fed=”purpose of the System is to foster growth at high levels of employment, with a stable dollar…” -failed miserably

p. 117 JKG -> ‘The Money Masters’ (see that cd on “The Creature from Jeckal Island” -via –says same thing re. creation of the Fed.; Also agrees that Fed. made Gr. Depression worse.

p. 118 “P is as p does”; ref.#5: BoGovs of Fed, The Fed Res Sys: Purposes and Functions (DC ’63), p2.; “Belmont Syndrome”
p. 127 varied defs. of ‘elastic money’ big problem: small banks left out of “club of the great and the strong.”
p. 128 ‘inflation could occur on a solid gold standard’
p. 132-133: Fed. is for big $

p. 145 –reminds me of Polanyi and his ‘Long 19th century’ as he and Galbraith end gold age in 1914
p. 147 -The 20’s: much of wrld gold had come to US, France had some gold: none left the US-> inflation and boom

p. 168: Churchill’s ’25 decision->Miners’ Strike; p. 175 Fed. caused Gr. Dep.: 1 July ’27 (imnsho);
P. 186 Austrian School economists all migrated to US just in time not to do anything about the Gr. Depr. for fear of non-existent inflation just because they saw hyperinflation in Germany under totally diff. circums. !!

p. 206: Keynes “Roosevelt is magnificently right” ref. 13, Schlesinger p.223
p. 209 on I. Fisher: equation of exchange (rules Quant. of money theory) and prices; warm praise-Keynes

p. 220 nixed Keynes won: 1.Say’s Law, 2. mkt. equib. w/out full empl. is possible
p.223 Hobson prev. fr. teaching to ‘question the virtue of unlimited thrift’ is ‘sin’
–JKG on Keynes: 1. must *enforce* spending 2. made it ok to contradict Says Law or discuss ‘oversaving’ as a problem
p. 230 “common sense…always been believed” but not nec. right

P. 255 (Ch. 18 Good Years: The Preparation) —imho he’s wrong about Keynes being ==Bretton Woods. I’ve read Keynes lost to the Ameri. delegation on most of his ideas (i.e. Bancor)

p. 262 censoring Keynes name out of JKG’s article review for Forbes…
p. 267 says Keyserling’s lost push for full-empl. led to/prep. way for later gains (else wouldn’t have even tried for more later…) –so always persevere…

p. 270 again confidence -> self-fulfiling economic pred.
p. 276 “in practice intervention was essential” for full employment… but economics myths tend to win out
p. 278 Keynsian antidote to inflation=taxes. Esp. on rich. hard to do –Ricard’s ‘monied men…’
p. 279 “rich prefer inflation” -imho because infl==higher prices->hjigher profits; Fed’s mon. policy makes it worse
P. 280 rediscount rate and open-mkt ops mythology still rules; -mon. pol. more convenient -fiscal pol.. M. Friedman saw Fisher’s (quant. eq.) as best option; GNP <- M (one of M-M4, take your pick dep. on whether counting savings as money, etc.) but !=Fiscal pol.
p. 283/4: but if infl. target == q. no infl. -> no price incr. -> no bus. expansion

P. 284 “archeology” of economics đŸ™‚
p. 289 “reputation of capitalism” –this is important??
p. 299 OPEC embargo luchy: had inflation to help the OPEC nations (i.e. w/out infl. embargo wouldn’t have worked…)
p. 300 Prof. Richard N. Cooper at Pres. Ford’s Summit Conf. on Inflation in autumn, ’74:
1. “surrogate tax” -back to JFKennedy’s cursing U.S. Steel re.Guideposts 2. admits that he didn’t see it at first, either

P. 302 “good tailor” better than curiosity

—WHY on earth does he keep linking corp.s and unions together as having so much power??!! Oh:
P. 303: ‘union and corp.’ power i.e. monopolies vs. Cesar Chavez (who actually used to report Mexican illegals
(one artificially keeps prices up; other artif. raises wages; both are outside normal market forces, unlike smaller players…)

p. 304-307 Afterword: in 1975 currencies already outside national ability to control, much more now w/internet: mon. policy can’t control so must use fiscal policy; imho need more progressive tax on rich to gain revenues from luxury items and keep down inflation (which only hurts the poor, since wealthy put money in other curr/comm. to protect it); JKG says Fed should stop mon. pol. (i.e. int. rate fidling) and do Lender of Last Resort (stop bank failure) work, control speculation. Notes M can’t be measured or controlled.
(ref. 1: A. Hayes ‘Testing Time for Monetary Policy’ address NYstate Bankers Asso. NYC Jan. 20, ’75…); Must be firm on raising taxes.

This guy was certainly no socialist.

Last sentence: In other words, ‘those who yearn for the end of capitalism should pray for…’ Alan Greenspan!

Read, Write, Run, Teach !

17 February, 12016 HE

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