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George Selgin Profile picture
George Selgin
@GeorgeSelgin
Free-market monetary guy who has lucid moments. Director Emeritus of @CatoCMFA. I promise not to waste our time by saying things you expect me to say.
16 subscribers
Nov 4 • 32 tweets • 6 min read
In a recent thread, I argued that understanding the consequences of free banking--that is, of free trade in currency and banking--is essential for critically evaluating claims of private-currency-market failure. The Treasury Borrowing Advisory Committee's recent presentation on digital assets is a perfect example of why that understanding is important: it shows how, between them, shoddy banking history and theory can mislead policymaters. TBACCharge2Q42024.pdf
Oct 30 • 42 tweets • 8 min read
Thread: A "free banker" takes stock. Half-way though my 68th seems late enough to start reflecting upon my carreer amitions, achievements, and failures. So, a thread that's longer--and more personal--than most others I've written. Economics wasn't my original career choice: in college, and for some time thereafter, that was marine biology. So I majored in zoology and studied at Woods Hole, the Duke Marine lab, and Auburn U.'s freshwater acquaculture program.
Oct 27 • 13 tweets • 3 min read
Thread: Yes, the period in question witnessed much social unrest and periodic crises. But it doesn't follow that the Fed's establishment improved matters, or that either the gold standard or budget surpluses were to blame for the period's problems. Concerning economic performance then, despite occasional panics and downturns, economic historians agree that it (more precisely, the period from 1873 to 1896) witnessed remarkably rapid total and per capita economic growth--more rapid than for any similar post-Fed span.
Sep 3 • 21 tweets • 5 min read
Thread: When the Fed was contemplating FedNow in Sept. 2019, I warned the Senate that it would take advantage of its privileged status to compete unfairlly with RTP, an already-established rival private-sector real time payments service.
Boy was I right!banking.senate.gov/imo/media/doc/… The 1980 Depository INstitutions Deregulation and Monetary Control Act (DIDMCA) requires that the Fed charge fees for its services fully covering the direct and indirect costs incurred in providing them "in the long run."
Aug 27 • 16 tweets • 3 min read
Thread: Although Sam's essay contains much that is true, like many libertarians he exaggerates the extent to which Keynes was either an enemy of markets or the reason why government looms so large in modern western economies. I particularly wish to take issue with this summary paragraph: Image
Aug 25 • 13 tweets • 3 min read
File under: a little knowledge. As Nuclear Henry George's misconceptions are shared by many, a thread concerning where he goes wrong. George's comment follows my suggestion that we'd be better off without central banks. Of course it doesn't follow that all monetary systems without central banks worked well! There is more than one way to screw up what might be a good system.
Jul 29 • 5 tweets • 1 min read
As many people, in contemplating the merits of a Stategic Bitcoin Reserve, are citing the Treasury's gold reserve (presently worth about $350 b.) as a precedent, a few observations on it. First, those reserves only exist as a holdover from the federal gov't's 1934 confiscation of the Fed's gold reserve. As a 2002 CRS report observed, they no longer serve "any important role in the domestic or
international monetary affairs of the nation." everycrsreport.com/reports/RS2120…
Jul 29 • 11 tweets • 2 min read
Soooo...I have just heard from someone in Senator Lummis's office who is familiar with the details of the proposed legislation. It turns out that it has practically nothing to do with "bank reserves" or the $3 trillion in Fed assets backing them. Therefore...another thread! The plan is in fact the much more modest one of having the gov't acquire 1 million in BTC, or about $64 billion worth. And the Fed would not actually be acquiring any (though it would be involved in the process). The Treasury alone would acquire them.
Jul 29 • 19 tweets • 4 min read
A thread on some issues raised by @SenLummis's proposal, so far as I'm able to understand it. First, a minor point many others have made: since the Fed abolished reserve requirements in March 2020, there is no longer technically any such thing as "excess" reserves. There are just bank reserves, consisting mainly of banks' account balances at the Fed.
Jun 8 • 19 tweets • 4 min read
Thread: Bank Reserves and Laissez Faire.
In several exchanges now, @BobMurphyEcon has been questioning the claim that fractional reserve banking is consistent with monetary laissez faire. Here I explain why I find the whole discussion frustrating. Back in 1980, after reading Hayek's _Denationalization of Money_, I became intrigued b the question, "What would banking systems look like, and how would they work, under laissez faire?" I spent much of the next several years, mostly at NYU, seeking answers to those questions.
May 14 • 25 tweets • 5 min read
I've been thinking about this post by @StevenHailAus; and I think that "very, very" is misleading: my opinions about MMT are not so different, I think, from @dandolfo's. So a thread concerning precisely where I do and do not part company with MMTs. First, functional finance. I have read Lerner's famous article many times, and I find little to disagree with in it; on the contrary, I mostly agree with it. As a long-time proponent of NGDP targeting, why wouldn't I? Lerner here is very much one of us!
May 3 • 7 tweets • 1 min read
Yep, Berstein blows it. But there is a perfectly good answer to Kelton's question. (Short .) While the U.S. government could finance all its spending without borrowing or collecting taxes, those are two ways for it to get the public to abstain from acquiring real resources.
Mar 16 • 9 tweets • 2 min read
Pre-1914 NBER “recession” (contraction) data are badly flawed. Using Joseph Davis’s revised chronology, the 1st column value drops to just 79. And as I noted previously, months in contraction matter less than months of high unemployment.

So sorry, modern economists: no cigars! So let’s look at unemployment. Here’s the preFed record according J. R. Vernon; not great but not godawful, either: Image
Dec 28, 2023 • 11 tweets • 3 min read
Follow-up thread: Something many people, economists included, don’t appreciate is the extent to which the roots of historic U.S. financial instability lie in regulations that actually made banks weak snd failure-prone. I wrote an article long ago proposing and giving evidence for what I called a “legal restrictions” theory of financial crises. citeseerx.ist.psu.edu/document?repid…
Dec 25, 2023 • 7 tweets • 2 min read
This is idiotically reductionist. For starters, the gold standard wasn’t to blame for any pre-1914 U.S. crisis: had it been the problem, Canada, which shared the very sane gold dollar, would have experienced concurrent crises. It didn’t. 1/ Instead, stupid U.S. banking and currency laws made it uniquely crisis-prone during that era. This is common knowledge among U.S. economic and monetary historians. 2/
Nov 9, 2023 • 15 tweets • 3 min read
Quick thread on “monetary sovereignty.” It happens that I’m in Vilnius now, for the first time in 32 years. Back in 1990 and 1991 I was here putting together, with Kurt Schuler, the first- ever proposal for a post-Soviet eastern European currency board.
Aug 24, 2023 • 18 tweets • 3 min read
Well, I think I have a new record for most frustrating thread! But not being one to give up easily, I am going to try here to clarify some things about NGDP targeting and the ZLB. First, some preliminaries. Let's set aside the ZLB problem for now, and also abstract for the time being from Aggregate Supply (AS) innovations. Let the equilibrium real GDP growth rate be a steady 2%.
Aug 15, 2023 • 13 tweets • 3 min read
A dollarization thread. Although I'm no dollarization expert, I am sort of a expert one-step removed.
The story goes back to the summer of 1988, which I spent in Hong Kong, working with John Greenwood, the mastermind behind Hong Kong's dollar-based currency board. John was deciding who to have take my place as a research fellow there the following summer. He'd had been given a name--a good one, actually. I said, "No, John: I have a better suggestion. Fellow by the name of Kurt Schuler.
Jul 21, 2023 • 24 tweets • 5 min read
As #FedNow launches, a thread concerning my long-standing opposition to it. Image I learned that the Fed was contemplating setting up a retail real-time payment system back in late 2017. I had no prior convictions on the matter, but offered to look into it. My findings convinced me that there was no good reason for the Fed to pursue that idea.
Jun 27, 2023 • 6 tweets • 2 min read
Many of the claims made about free banking in this thread are false, starting with the claim below that under it the supply of money is "inelastic." I wrote a book in 1988 devoted to showing the opposite. In the small world of writings on free banking, it isn't exactly obscure! "Free banking had centralized governance within banks. In Zero...the community calls the shots. It’s like everyone gets a vote."
Perhaps a little reading-up on economists' understanding that "consumer sovereignty" prevails in competitive markets is in order here!
Jun 11, 2023 • 7 tweets • 1 min read
A thread: Some deliberately naive questions. Let’s say that all market participants decide not to accept paper currency, insisting instead on digital media, which could in principle be public or private. Central bankers are saying this obliges them to enter the retail digital money business. I’m not convinced.