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Responses to latest Krugman attack

Paul Krugman has challenged Ron Paul supporters to state whether they think money market funds should be made illegal because they are a de facto form of fractional reserve banking:

"...consider a more recent innovation: money market funds. Such funds are just a particular type of mutual fund — and surely the Austrians don’t want to ban financial intermediation (or do they?). Yet shares in a MMF are very clearly a form of money — you can even write checks on them — created out of thin air by financial institutions, with very few pieces of green paper behind them.

So are such funds illegitimate? What about repo, which has many of the same features?"

Wondering how my fellow DP-ers would respond.


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Krugman is such a tool, and

Krugman is such a tool, and so easily debated, which is why he refuses to debate an Austrian.

The answer, remove government protection from banks and let the market decide whether money market funds will or will not exist in the free market.

I must be willing to give up what I am in order to become what I will be. Albert Einstein

reedr3v's picture

It would seem to me we have no choice in

fractional reserve banking. It is mandated by the State, we are not allowed to avoid the entire system, it permeates the monetary edifice beginning with the Fed that disperses trillions to the banks at taxpayer expense.

Unless I am mistaken, investing in market funds, though often allied with the banks, is a voluntary activity.

If I'm correct, it would starkly show that Krugman cannot conceive of Liberty or non-coercion or the NAP (of course he can't.)

Thanks for the response

I am favor of monetary competition, which includes the ability to save in banks that practice fractional reserve banking. If given the choice, I would probably invest in financial objects like MMFs, but any losses would be my own to bear.