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The Strange Case of Pro-Confederate Monetary Policy

By Matthew Yglesias  

"The Strange Case of Pro-Confederate Monetary Policy"

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Mike Konczal has a post up about Ron Paul’s monetary policy hearing today, in which he notes that one of Rep Paul’s key witnesses is a neoconfederate kook:

I like the title: does monetary policy ever really work? As for the witnesses, Thomas J. DiLorenzo is a senior fellow at the Ludwig von Mises Institute. He’s got the Lincoln stuff down pat. He appears to be best known as an author of “>Lincoln Unmasked: What You’re Not Supposed to Know About Dishonest Abe (example, see this interview:“I saw it as my duty to spread the truth about what a horrific tyrant Lincoln was…. I think secession is not only possible but necessary if any part of America is every to be considered “the land of the free” in any meaningful sense…Lincoln was almost exclusively devoted to Hamiltonian mercantilism — high protectionist tariffs, other forms of corporate welfare, a central bank modeled after the Bank of England to pay for it all, and political patronage and matching politics….The entire agenda of Hamiltonian mercantilism was put into place during the Lincoln administration — along with the first income tax, the first military conscription law, and the creation of the internal revenue bureaucracy, among other monstrosities”).

Konczal situates this in the context of the long-running feud between the supercrank libertarians of the Mises/Paul faction and the more mainstream libertarians of the Koch/Cato faction. And, indeed, the Mises crew’s obsession with the evils of Abraham Lincoln is certainly a distinctive attitude. What’s more, until very recently support of activist monetary policy to support the economy in times of depressed output was deemed an acceptably libertarian approach by Cato types. Milton Friedman, back in those days, counted as a libertarian. The interesting thing, though, is that on the subject of monetary policy the Kock/Cato people have decided the Mises faction is right and have been loudly denouncing Ben Bernanke as a socialist bound to create ruinous inflation.

Part of the story here is partisan opportunism, and part is genuine economic conversion. The point, however, is that the combination of steep recession with Barack Obama becoming president has led to the mainstreaming of demand denialism in mainstream center-right circles. This is a big shift from where things were two years ago, when people debating the merits of different demand-bolstering instruments (fiscal vs monetary, tax-side vs spending side) but agreed on the overall theory.

The actual CSA, it’s perhaps worth noting, did in fact suffer from ruinous inflation.

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