I am taken aback that anyone could seriously think we can spend and consume our way to prosperity. I don’t get it. Seems so obvious to me that when you are over your head in debt, the solution is not more debt, but cutting back, letting go of sunk costs, reevaluating priorities, and saving up to recharge your safety net before taking on more risk. Yet... a plethora of seemingly intelligent, highly-educated individuals don’t share this point of view. (Imagine that - People don't agree with me!)
Where is the disconnect? How does something I see as so nonsensical make sense to anyone, let alone to well-intentioned, reasonable people?
One point of departure is how we think of money. What is money? What is its role in the economy? What is the proper relationship of government to money?
Before tackling which monetary policy will best address the problems we face today, we first need to explore the matter of money itself.
In the spirit of trying to understand the issues and differences in opinion as best as I possibly can, I have invited a guest to write a post for my blog. Glenn and I have been sporadically exchanging emails on economic matters since mid-October. His analysis and conclusions are Keynesian in origin, while mine start from an Austrian point of view. I have learned a lot from this exchange and greatly appreciate his willingness to trade explanations and ideas.
The better grasp I have of opposing arguments, the more refined is my thinking. I asked Glenn to write a post defending fiat money while I wrote one in support of a commodity money (i.e. a gold standard.) We each wrote our posts independently and “in the dark” with respect to the other’s points. We ended up taking slightly different tacks in addressing the issues. If he's willing, we can post follow ups considering the points the other raised which were not addressed in our original essays.
Please join the discussion. Let's keep to the subject of "What is (should be) money" and see what we can learn!