Courtesy of Mish.
According to Forbes, economist Sandeep Jaitly was forced to resign from his position at the Gold Standard Institute after expressing his views with Max Keiser.
Said Phillip Barton, president of GSI “Lest there be any misunderstanding, the views expressed by Sandeep Jaitly in his interview with Max Keiser are not the views of The Gold Standard Institute. To the contrary, we strongly disagree with those views. …. Sandeep Jaitly has resigned from his position as Senior Research Fellow with the Institute and we sincerely thank him for his past contributions.“
Let’s Tune Into Max
You can read the interview at Keiser Report: Frankenmarkets and Austrian Economics.
What appears to have gotten Sandeep in trouble is his criticism that Mises made “too many mistakes“.
However, Sandeep did say, “He [Mises] was certainly the greatest economists of the twentieth century. It’s just that he made a slight, few errors of observation. That’s all.”
Errors in Observation
When it comes to errors in observation, Sandeep has made a few of his own. For example consider these statements from the interview: “What I want to make very clear Max is that you don’t need marginal quantitative easing from here for asset prices to start escalating. You only need what has already been printed to start spinning more quickly. And once things start spinning, nothing can slow it down.“
Interestingly, the first sentence is true. However, the following sentences show Sandeep fails to understand the role of attitudes as well as the fundamental nature credit in a credit-based economy.
The statements imply that printed money may come spinning into the economy at any time causing massive inflation the Fed could not stop.
There are two errors in such an analysis. The first error is that banks do not lend from excess reserves. Rather, banks lend, on two conditions, both of which need to be true.
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