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Debate Notes

Photo of Robert P. Murphy

On June 3, Columbia University hosted a debate on monetary/fiscal issues between Warren Mosler and Robert Murphy.

Murphy (pictured above) is an associated scholar at The Ludwig von Mises Institute, and he defended the Austrian school's views: specifically, that the key to understanding a bust is to understand the boom, and that in modern circumstances booms come about due to interest rates that are lower than the natural rate, due to the imprudent actions of governments and central banks, and that these booms are responsible for the subsequent busts.  Central banking, then, is the disease that it affects to cure.

Murphy was opposed by Warren Mosley, an advocate of what he calls "soft currency economics." He maintains that "the natural rate of interest is zero," that is both national debts and the monetization of those debts via central banks are non-problems, imaginary problems in which only the dupes of obsolete theories believe.

Mosley's view, it appears, is that the government can and should rev up the printing presses without limit, that this will have a stimulative effect with no costs to speak of.

Indeed, even Paul Krugman has criticized Mosley as insufficiently concerned about deficits, though Krugman himself has made almost a second career out of pooh-poohing concern over deficits.

So it was an intriguing match-up for an exchange of views.
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