Walter Block: Doug Casey Is an Optimist
Walter Block Interviewed by Louis James, Editor, International Speculator
L: Hello Walter, it's been years – thanks for agreeing to speak with us.
Walter: My pleasure. Where do we begin?
L: Well, you're an academic – let's start with that. What's your academic claim to fame?
Walter: My main claim to fame is that I shook hands with Ludwig von Mises – and have never washed that hand since. So if you shake my hand – it's purely voluntary – you can channel Mises.
L: [Laughs] Well, it's been said that libertarianism is best spread through person-to-person contact.
Walter: I was also a friend of Murray Rothbard's – oh wait, I have a picture here of me playing chess with Hayek. Can you see it?
L: Yes… These are excellent credentials for free-market economics junkies.
Walter: Yes, well, ordinarily when you ask an academic for credentials, he'll tell you where he got his PhD, or what research he's working on now. But my PhD in economics, from Columbia University
L: That's a technical economics term?
Walter: [Chuckles] While I was studying at Columbia, I read Hayek's Road to Serfdom, and in the introduction Hayek says that he hates to take time away from his important academic work to write such a political book, but that it's necessary. I asked my professors if I should read Hayek's important work, and they all said, "No, no, no. It's nonsense." So I never read Hayek until years later when I met Murray Rothbard and really got into Austrian economics. That means that the honest answer to your question is that my official academic credentials are worthless, at least in terms of knowing anything about the dismal science. Of course, insofar as getting an academic job, a PhD from Columbia must count as a plus, a very large one.
L: But you've written about ocean-steading and other theoretical matters; surely you've pushed the boundaries of human knowledge somewhere?
Walter: Well, I think I've pushed the envelope on libertarianism more than on economics, but I have made a few small contributions on the theory of interest rates, the business cycle, and the gold standard. More recently, I've coauthored a whole series of articles with my colleague Bill Barnett, mainly on Austrian economics and methodology. We've come out with a book on this, called Essays in Austrian Economics. [Waves book in front of camera]
L: Wow, that looks quite weighty!
Walter: [Chuckles] Yes, it's 600 pages long, so you can bash people with it if they don't see reason.
L: That's what leftists do with their copies of Das Kapital, so fair is fair.
Walter: The cover depicts our criticism of the Austrian structural production triangle analysis, which was used for a long time, even before Hayek – but getting into that may be more technical than we want for this conversation. Let me just say that we are criticizing some of the ideas of our predecessors, Hayek and Mises and so forth, but from an Austrian perspective – what we hope is a truer Austrian perspective.
L: I once heard Peter Boettke say, "We stand on the shoulders of giants, but we have to kick their heads sometimes."
Walter: [Laughs long and hard] That's magnificent! That openness to inquiry is important and welcome. Austrian economics has sometimes been called a cult – I've been called a cultist to my face by my former thesis advisor at Columbia, Gary Becker, and also byJames Buchanan. Both of them have won Nobel Prizes in economics, which indicates what I think about that award – apart from Hayek's.
L: Well then, let's take a step back from the academic world and talk about your work in an area of great interest to our readers: the gold standard. Can you defend the premise that gold is not just a "barbaric relic?"
Walter: That's a good topic. It was Keynes who called it a "barbaric relic." It has become a relic, in the sense that it has not been used as official money for many decades. Our man FDR took our gold away in the 1930s, then Nixon severed the last link between it and the dollar in 1971. But the real problem with gold, from the point of view of our friends on the left, is that it functions as a set of fiscal handcuffs on the government.
L: Because gold can't be printed at whim. To spend it you have to have it, physically.
Walter: Right. Now, there are three – and only three – ways the government can get money. The first is to tax the people. The problem with that from the point of view of our masters is that everyone knows who's doing it. The politicians can't blame greedy capitalists or any others for what the tax-man does, and that's a problem for them. The second source of revenue for the government is borrowing. But again, there's a limit on how much you can borrow, because everyone knows who's doing it – and has a good idea of how indebted the government is. The third way is much, much better from their point of view, and that is to create money out of thin air. That may be done via fractional reserve banking, or printing fiat currency, or whatever. This is good from their perspective because not one in 1,000 people, or maybe not one in 10,000, knows who's doing it and that it is causing inflation. It's theft on a grand scale, understood by so few, so they can get away with it.
I think it was Lenin who said that the best way to destroy an enemy is to debauch that country's currency. That's what these guys are: currency debauchers. Ben "the paper hanger" Bernanke is going berserk with his quantitative easing. There's no more quantitative easing one, two, or three, its quantitative easing forever. Every month, billions of new dollars are pumped into the economy.
So the last thing the government wants is this barbaric relic to limit their spending to what they can actually tax and borrow. And that, of course, is why people like you, me, Doug, and like-minded others, favor the gold standard; we want the government handcuffed, so it can't go around spending money it doesn't have on unnecessary wars and other destructive and counterproductive things governments like to do.
L: I agree, but they'll never admit it.
Walter: Of course. What they say is that gold is bad because it used to cause volatility and instability in the economy. But it's not true. If you look at the business cycle in the 100-year period before the Fed was established in 1913, and compare it to the 100-year period after that (to the present day), the volatility has been vastly greater in the more recent period of greater government involvement in the economy and the abandonment of the gold standard.
There was volatility before, and some of it was due to imperfections in the gold standard we had then, but the volatility of the business cycle was much lower in the earlier period than in the latter one than what we have now. So I'm a big fan of the gold standard. So is Ron Paul, who's done yeoman's work getting the word out. The Keynesian idea is just totally wrong.
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