| | By analogy consider the Pythagorean Theorem. Many proofs are known. In engineering mechanics, it comes into the resolultion of forces. I was told that the distance formula is an axiom in Cartesian Geometry. So, we can argue this many ways, but I am not sure which proof and which application is the essential. So, too, here.
I do agree with William Dwyer than money has many prices. One he left out of paramount attraction for me is the cost of production: minting and printing are also the "price of money."
However, the "price of loanable funds" has its own supply and demand. The definition of "loanable funds" depends on their price. Pay me enough for my cash, and I will cut down on my food, certainly on many other discretionary purchases.
The Austrians accepted "banking" as a given: buildings with vaults run by entrepreneurs with employees. In a completely consistent free market model, every actor or agent is a bank, or an investor, or a manufacturer, or a labor, or an inventor, or an entrepreneur. It just depends on how you want to analyze any given problem.
The Austrian explanation seems plausible because we want to believe it. Whether and to what extent people are stupid in general and ignorant about money is arguable. You would think that after the first 25 or 50 times since the Bank of England was founded in 1694 that someone would have caught on ... and eventually the common wisdom would look at lower interest rates and instant credit the way we take predictions for the end of the world. The problem is that it really is in your self-interest to borrow cheap money now, regardless of the social consequences.
(As an aside, we all love those big silver dollars from George Morgan, but they represented horrific inflation, at a time when prices fell. Go figure.)
I have seen some cute cartoons in this mode, but this was not one of them. I can read faster than they can talk.)
|
|
