Debate on reserve fractional banking devolves into public squabble

Ron Paul showed how he is open to debate by having both Professor Joseph Salerno and Professor Larry White testify before his sub-committee on the subject of fractional reserve banking. But a perceived bias towards Salerno prompted a rebuke by George Selgin.

Charles Rex Arbogast/AP
In this February 2012 file photo, Republican presidential candidate Rep. Ron Paul, R-Texas, speaks during a campaign stop at Bethel University in Arden Hills, Minn. Paul recently hosted a debate between two financial experts on the subject of fractional reserve banking.

Ron Paul recently showed  how he is very open to debate, by having both Professor Joseph Salerno (a 100% reserves advocate) and Professor Larry White (a “free banker”) testify before his sub-committee on the subject of fractional reserve banking. 

However, as he made clear in this post in his Congressional web site, Ron Paul is very much on Salerno’s side of the debate.

George Selgin is none too happy about this, and Ron Paul’s post has elicited from him a quite vituperative comment.  Selgin goes so far as to accuse 100% reserves advocates as being a “moronic cult.”

Selgin, in a post commenting on his own comment, says:

Although the first priority of every believer in monetary freedom must be to combat bogus arguments for monetary central planning, we cannot do this effectively unless we are just as relentless in exposing the 100-percent reserve movement for the moronic cult that it is, to keep its clownish convictions from giving the entire movement for monetary freedom, if not free market economics more generally, a bad name.

Selgin is obviously endorsing two approaches to advancing fractional-reserve-friendly free banking.  There is the “argumentation” approach he leads off with.  And then there is the “expose the cult” approach he insists must not be neglected.  But what exactly does he mean by that?

Nowhere in Selgin’s original post does he make any kind of pscyho-sociological case for the anti-fractional reserves set qualifying as a cult, much less a moronic one.  He asserts that they’re in error (and vaguely references economic refutations against them made elsewhere, without giving a hint as to their content).  But it is doubtful that he means that refuting them is how he means to expose them as a cult, because then it wouldn’t really be a separate approach from the first approach he brings up.

When a commenter on his blog called him to task for his incivility, Selgin gave tell as to what he might mean by “exposing” his intellectual opponents.

Rest assured, Pedro, I am no more interested in being “nice” to 100-percenters than I am interested in being so to central bankers. Nor am I intent on persuading them about anything–I’ve tried that, as have others, to no avail. Ridicule is no more than their just deserts.

So perhaps, what Selgin means is to “expose” his opponents by ridiculing them.  Perhaps his aim is to prevent his opponents from achieving what he thinks of as undue influence and notoriety by simply calling them names.  In other words, he aims to “expose” his opponents as a moronic cult by the mere act of calling them a moronic cult.  It’s not like this approach never works.  If, in middle school, one student calls another “an idiot” enough times, that will often cause other students (especially the first student’s followers) to write the second student off as one.  What is ironic is this kind of social strategy is itself more typical of cults than anything.  Not that I would ever accuse Selgin of being a cultist.  I’m not even an academic, and even I know that would be unbecoming of one.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.