This past week saw the ideas of the New Austrian School of Economics unleashed upon the University of Auckland Business School in a five-day symposium entitled: Gold and Economic Freedom .

Professor Antal Fekete acted as featured lecturer and delivered a series of talks covering Coordination of the Social Interaction, A Brief History of the Gold Standard & Imposters, Hoarding and Gold’s Role in Finance, Gold Bonds to the Rescue, and the Unadulterated Gold Standard Explained.

The Professor repeatedly brought attention to the work of Carl Menger, a man “universally successful in all he touched.” Menger’s emphasis on the spread , Fekete contended, provides the key to economic understanding. His focus on the individual nature of money, how the recognition of different degrees of saleableness of goods leads to the discovery of money (the most marketable good), is central to understanding economic action.

The Professor described the social coordination of economic actors as a system of cobwebs , where disturbances are distributed throughout the system and felt by all points. He spoke in detail about the Unadulterated Gold Standard , also known as the Gold Coin Standard , and discussed the imposter gold standards of the 20th century, the Gold Bullion Standard and the Gold Exchange Standard .

He explained the concepts of marketability in the large and marketability in the small and outlined how these concepts represent the duality of money , the practice of using two types of money together in indirect exchange. He declared that hoarding has a place in even the most sophisticated financial system and noted its integral role in regulating the interest rate , the measure of the efficiency of the exchange of income for wealth over hoarding.

Illicit interest arbitrage , borrowing short to lend long , and risk-free bond speculation were all discussed in detail, and it was explained how these forces create a situation where both the supply of, and demand for, government bonds is infinite.

In the afternoon lectures, the ideas of Menger and Professor Fekete were expanded upon by several ferocious minds. Highlights included Sandeep Jaitly’s remarks around social interaction , a process of movement which takes different forms and has different frequencies . Jaitly described the natural extension of credit, supported by gold money, and the creation of higher-order money of various durations.

He defined borrowing short to lend long , a practice whereby dealers of debt create a mismatch of durations in their bond/bill portfolios and cause non-uniform expansions & contractions of credit and business cycles.

Symposium organizer Louis Boulanger discussed Why Gold Is Money and centered his lecture on Carl Menger’s essay On the Origin of Money . He talked about how debt growth represents the ever-increasing promise of future goods to service the present, how measures of value are relative , and how fiat currencies are elastic measures of value .

Keith Weiner led a technical discussion on Gold Backwardation with particular emphasis on the gold basis and co-basis . He defined how these metrics are calculated, as well as the terms contango and backwardation , which represent normal and abnormal relationships (respectively) between the spot and future price of gold. He explained how gold backwardation has thus far been solved by higher prices and described what to look for when gold backwardation turns permanent.

Rudy Fritsch presented Gold Standard: A Stable 3-Legged System and centered his talk on a brilliantly simple, informative diagram that captured the three components of the (unadulterated) gold standard: bonds, bills & money. He defined debt, or credit, as the exchange of present goods for future goods (promises), money as that which extinguishes all debt, and explained how legal tender laws equate present and future goods.

Given the depth of original thought and the completeness with which the ideas of the New Austrian School of Economics were presented in Auckland, it is clear that a once “dismal science” has given way to a vibrant, highly engaging, social science that is just now taking flight in the minds of men en masse.

We need no longer look to the heavens for answers to the financial problems we face in today’s world. The answers have been worked out and assembled by the New Austrian School of Economics. Be on the lookout for when its ideas invade a city near you.