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Michael Marotta's Blog

01 Jan 2016

Numismatics Informs Economics

| Michael Marotta

Social sciences attempt to mimic physical sciences with concise and precise laws about complicated phenomena. But, even astronomy is theoretically limited to a two-body universe. Add more bodies and the nice algebra of theory must give way to laborious numerical approximations. So, too, with economics. Gresham's Law applies to two currencies - say the silver dollar and the gold dollar; or to silver dollars of one standard versus minor coinage of another fineness. Reality is more complicated than that. As Hayek pointed out, a plethora of moneys circulate. Economists just focus on one or two issues of the government.Unfortunately, lacking knowledge of numismatics, Hayek could not state his case empirically. The Austrian school is rationalist, deriving universal laws froma prioriassumptions.

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