REJOINDER TO HANSENAND NEWMAN ON GOLD

Hansen and Newman (HN) criticize Barnett and Block (2004, 2012, hence BB) for taking the position that gold discoveries, which emanate in additional free market gold money, are socially beneficial. HN, in contradistinction, take the view that since any amount of gold money can do the same monetary “job” as any other amount, that these new additions are not socially beneficial. Rather, they constitute a market failure. Not only are additions to the money stock problematic from their point of view, but it also logically follows that we should decrease the quantity of money in order to ward off “market failure” since from the perspective of the past, the present quantity of money was increased from its level at that time. The present essay attempts to defend the perspective of BB vis-à-vis that of HN.