Reply to Comment by Murray N. Rothbard

Reply to Comment by Murray N.RothbardRichard H. Timberlake, Jr.hree main issues appear in Professor Rothbard's "Comment," all ofwhich are related to a principal theme.1 The issues are: (1) the Aus-T trian circle and regression theorem, (2) the difference between moneyand other economic wealth, and (3) the measurability of economic activities,particularly monetary phenomena. Rothbard begins with the Austrian circleand regression theorem; he then brings in the difference between money andother economic things. His gravest oversight is on this latter point, so I beginthis reply with an analysis of the difference between money and other things.Rothbard observes that I use my reference to W.H. Hutt's classic article,"The Yield from Money Held," to conclude that "there is no real differencebetween money and other goods, since each has its own direct utility, andtherefore there is no unique circularity to the utility of money that theoristsneed to solve." Rothbard then explains the difference between money andother economic goods. All money is nominal, while all goods are real. Eco-nomic resources properly mixed with economic organization can result ingreater production of goods and services, and no amount of such productioncan ever be "optimal"—that is, too much."But money," states Rothbard, "is totally different. It is the unique natureof money that its usefulness . . . stops as soon as it is in sufficient supply tobe adopted as a general medium by the ...