I really resent the fact that folks caged in the New York condo's think that I resent them because they think that I think that they are somehow my social betters. I could not care a fig about them and what they do until they come to DC asking for bailouts, paper swaps or whatever the hell you want to call it from the Federal Reserve. Moral Hazard is a sound and sobering principle, and if they fall out of their tree and hurt their heads I am going to care little more than when they thought they wanted to go climb it in the first place.
But to create rampant inflation to bail out what they did to themselves is immoral and it is picking the pockets of folks who did nothing to create it in the first place.
In the middle ages, usury was denounced as theft, and moneylenders are parasites and bloodsuckers. The illusion involved was that the real value of future wealth used to repay a loan, is exactly the same as the value originally lent, when and only when the two physical quantities were numerically identical. This amounted to the illusion that the *value* of the two *must* be the same, if they are the same commodity, and the only difference between them is *time*.
The belief that the value of a commodity must be the same if the only difference is time, is simultaneously the denial of the existence of time-preference, and at belief that value cannot change. It was peculiarly common with money, as opposed to all other goods, undoubtedly because something in the human mind resists the proposition that the yardstick being used to make a measurement of other things, is itself subject to change.
The fallacy involved is exposed by the fairness of the rule, you cut and I choose. A man who maintains that usury is unjust believes that loans should be made without interest, not as a matter of accomodation or gift on the lender's part, but as a matter of strict justice. He claims to believe that anyone who asks for more than this is committing a form of robbery.
But he is not himself willing to stand in the lender's position, on his own demanded terms. He won't lend me half the value he will ever produce at zero interest, today, for example. He therefore does not honestly believe the value of the two things he is demanded by treated equally, are in fact equal. Instead he is using other people's possible confusion in the matter, to "talk down" the other side of a trade, that he intends to take himself, exclusively on one side.
In the early 19th century, right after usury was legalized by the last traditional institutions opposed to it, socialists developed the exploitation theory of value, which extended anti-interest reasoning to the income from capital, aka ordinary profit. Previous defenses of interest had by then pointed out the effective equivalence between interest and profit. The socialists exploited this equivalence, and the lack of a fully developed theory of interest, to attack all profit in the terms once reserve to denunciations of usury.
They claimed that the only fair price for labor was one that made regular profits zero, and that any non-zero profit arose solely from exploitation. They sought to equalize two values - the total labor input to some good, all previous raw materials being viewed as "embodied labor", and the value of the eventual finished good at sale. Therefore, they claimed, profit is theft.
Again they were effectively ignoring the time factor, and in this case also a coordination factor or dedication of various assemblies of goods to specific combined uses. Bohm Bawerk pointed this out, and thus reduced the question of the truth of the exploitation theory to the question of the justness of interest.
Before him, however, Proudhon had generalized from proft to include rent, and thereby all income from property. His principle, that property is theft, stated where the view ends, in all of its forms.
The same principle of you cut I choose demolishes these claims. The socialist is not willing to have the laborers lend the full value of their labor to the employers for the entire duration of the productive process, and to only be paid the future value of sold final goods. The time value argument showed what is really happening, as well. Basically, a correct theory of interest refutes all these previous slanders against property income.
The argument against property as such having failed, socialists next took refugue in the swamps of monetary theory. Inflationists pretended that only restriction on the production of money supported the "restrictionist" interests of cartelized capitalists. It was to answer this argument that Mises wrote Money and Credit in the first place. He was pursuing an evasion of his teacher, Bohm Bawerk's, arguments.
In the course of doing so, however, he was driven to denouncing modern forms of banking as supposedly causing the trade cycle. He also unfortunately fell for the argument that just about anything is justified by the need to avoid that cycle, which he denounced in terms fit for Weimar's war aftermath and occupation driven inflation, or the great depression. This is in marked contrast to Hayek, who correctly identified the principle that economic liberty should not be sacrificed for a merely alleged economic security, which is actually incompatible with freedom.
This has since led to the near obscenity that pretended followers of von Mises denounce capitalism as a banker's ramp. They hold, just like their medieval and modern socialist predecessors, that banking is theft. The medievals taught that banking it theft because it involved interest, the socialists because it involved property and profit, and the Pauleans because it involves credit. Their position, at bottom, is that *credit is theft*. They are the heirs to Proudhon.
And the practical import of all these positions is precisely the same. They all justify unrestrained attacks on financial capital and justify any measures taking against it, both personal criminal action against specific financiers, and taxations or expropriations directed at the profits of financial capital. At bottom the exact same class warfare rhetoric is used by all of them. Even the basic debating tactic is the same - any weakness in economic theory available at the time, is blown up into an indictment of financial capitalism as a whole, which is denounced as an oppressive racket, justifying any desired response.
Against all of these claims, the same argument must be deployed and insisted upon, by all defenders of economic liberty and capitalism. Interest is not theft. Profit is not theft. Credit is not theft. The profits of capital are entirely legitimate. The profits of finance are entirely legitimate.
Capitalists and financiers are fine upstanding men performing vital services to the entire society, and largely responsible for its efficiency organization. Their social and economic positions rest on the fair rewards of the risks they take and the degree of their insights. No pretended perfection on their part is required to justify their incomes or their position. Their wealth does not exist at the expense of others. Others do not have any prior right to their wealth or their profits, or for financiers not to earn them in the first place.
And anyone alleging otherwise should be asked to stand in their place on the terms they advocate as supposedly fair. If you cut, then I choose which side of the cut you shall stand on, and which side of it I shall take. When they are unwilling to do so, they stand exposed as consciously unjust toward those they are denouncing. When a man who will not expose himself to the dangers of owning Citicorp stock, denounces bankers as thieves, that man is an utter fraud.
Exactly like Proudhon or Marx. Just exactly the same.