I have been writing refutations of monetary cranks for over half a century.
I wrote my first essay on a monetary crank, Gertrude Coogan, in 1965. Her book was Money Creators. It came out in the 1930's in the Great Depression. That was the golden era of anti-gold standard fiat monetary cranks.
I wrote the essay because R. J. Rushdoony had been taken in by the cranks in the late 1950's. Specifically, he read the greenbackers. He also read Mises, but he did not understand Mises' monetary theory.
The greenback monetary cranks have always been opposed to the Federal Reserve. Why? Because the regional Federal Reserve banks are privately owned. They hate all private banking. They are committed statists. They originally were people of the Left in the late 1880's. Today, they are found on the Right, but they are in no way defenders of the free market. They want Congress in control of money. They also teach that there can and should be zero interest rates in society. This is sheer quackery. It is the equivalent of faith in perpetual motion. Mises was the great opponent of such an idea.
As I say, Rushdoony did not understand Mises on this point. At the William Volker Fund in 1963, where Rushdoony worked, and I was a summer intern, I spent the summer reading Mises. I was paid to do this. It was the best job I ever had. At the Volker Fund, Rushdoony had stocked the give-away book shelf with monetary crank books. I knew there was a problem.
Finally, in 1965, I wrote a long paper for Rushdoony on Coogan when I was in grad school. I did it for free. He immediately dropped references to her. He never quoted a monetary crank's arguments on money again. He learned.
I published that essay in my book, An Introduction to Christian Economics, in 1973. You can read it here.
In 2011, the Mises Institute published an updated version of my paper. I titled it Gertrude Coogan's Bluff. You can read it here.
Today, Ellen Brown is the intellectual heir of Gertrude Coogan. Her book is Web of Debt. She is a statist. I have dealt with her errors, both theoretical and historical, here. She started out as a critic of the Federal Reserve, but when Bernanke oversaw the reduction of interest rates to almost zero, she switched sides and became a cheerleader. Her intellectually crippled followers switched with her. The Bible has a phrase for this: "the blind leading the blind into the ditch."
Then there are the followers of Major Douglas. He was an engineer with no understanding of economics. He began writing in 1918. He also was a believer in government fiat money. He gathered a considerable following. He called his idea social credit. There were political parties formed in the 1930's in England, Canada, and Australia devoted to social credit.
I wrote a book on Social Credit in 1993: Salvation Through Inflation. You can read it here.
Major Douglas was praised by John Maynard Keynes in The General Theory of Employment, Interest, and Money (pp. 370-71). That was because Keynes was a monetary crank. His followers pretend that he wasn't. His praise of Douglas is a major embarrassment to academic economists who call themselves Keynesians. They would like to drop this down the memory hole. I like to dredge it up. Here is my Mises Institute speech on this.
Monetary cranks have always supported the abolition of the gold coin standard. The 1930's were their decade of victory. In 1939, a group of economists got together and issued a typed paper, "A Program for Monetary Reform." The group included Irving Fisher. He had bankrupted himself and his sister-in-law by then. He had said in September 1929 that the stock market was at a permanently high plateau. He lost everything by his incompetent investing. With this paper, he was trying to salvage his self-destroyed reputation. You can read the paper here. The paper was never published. It had no influence. But it is famous in retrospect.
Fisher was a socialist. This is rarely discussed. I discuss it here. Mises spotted his ideas early as monetary statism. He singled him out as a monetary statist in the 1912 German edition of Theory of Money and Credit. He devoted considerable space to refuting him.
We live in an era of fiat money. The monetary cranks are in charge of central banks around the world. These banks will oversee a series of disasters. They already have, beginning with the Great Depression. Murray Rothbard chronicled this in America's Great Depression in 1963. It is here. I read that book in the summer of 1963. It saved me a lot of grief. I was not taken in by Friedman's section on the Great Depression in A Monetary History of the United States, also published in 1963 in the same town, but not the same publisher, as Rothbard's book was. Friedman's discussion has become standard in academia -- the only topic on which he has gained universal acceptance. He called for more fiat money issued by the FED in the 1930's.
Monetary cranks come in many forms. They all have the same message: the gold coin standard is a liability. We need fiat money issued by either a national treasury or a government-licensed monopoly central bank. The free market must not be trusted, we are assured. The private property system does not work for money, they tell us.
They are cranks. All of them.
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