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As part of a series of Nobel Prize lectures, the "Current Issues in Financial Markets" presentation hosted the 1994 Nobel Memorial Prize in Economic Sciences recipient, John Forbes Nash Jr. The presentation included introductions by Dominick Salvatore, the distinguished professor of economics at Fordham, and Charles Soludo, governor to the Central Bank of Nigeria.
Among those in attendance were Nash's wife, Alicia, and members of the economics department.
The presentation, which took place on Oct. 13. in Flom Auditorium, drew a crowd of over 300 attendees. Seats were limited inside, but students and other attendees either crowded into standing room in the back, sat outside and watched on a television, or watched on television in the fourth floor O'Hare Special Collections room.
Nash is most popularly known as the subject of the biopic A Beautiful Mind, which chronicled his academic career and battle with schizophrenia (parts of the movie, in fact, were filmed on the Fordham campus). In an academic setting, Nash's spirit is forever stamped in game theory - specifically, the Nash Equilibrium. Aside from his revolutionary academic contributions to the fields of mathematics and economics, Nash is also independently credited as the inventor of the board game Hex in 1947.
Salvatore commenced the presentation by outlining the various causes and effects of the subprime crisis. Professing himself to be "apolitical," Salvatore faulted the Clinton Administration foremost for pressuring banks to issue subprime loans under the illusion of the "American Dream" and the Bush Administration for passively presiding over the crisis. He ended his lecture on a high note by revealing his conviction that a "depression" will not occur. He forecasted that the "recession may end in the second half of 2009" but that the economy may experience "slow growth for another year or longer." He also said that everyone must "learn to live within [their] means."
Soludo assumed the podium next and prefaced the lecture by reminding attendants of the economic principle that there is "no free lunch." Soludo's lecture added an international edge to Salvatore's focus on the subprime crisis in America, as he recalled waking up one day and realizing the effects of the crisis on the Nigerian market. He concluded his address by asserting that society as a whole has completed a transitional historical shift "back to the era of state control."
Moments later, Nash took the podium. Through extensive PowerPoint slides, Nash explored the various dimensions of money.
"Ideal" and "asymptotically ideal" money were Nash's focal points for the lecture, along with his criticism of Keynesian theory.
While the topics of ideal and asymptotically ideal money were only covered briefly, they form the basis for Nash's qualitatively sound currencies, as they pertain to the current economic climate. Ideal money, he says, constitutes "a medium of exchange [which] would be structured so as to provide a medium with a natural (and reliable) stability of value." On the other hand, asymptotically ideal money is related to the concept of an international standard of currency that has a "lessened rate of inflationary depreciation in value" and is of "good quality."
Nash did not hesitate to attack the Keynesian school of economics, which is virtually dogma for the nation's financial leaders. He defined a Keynesian as one who would "favor the existence of a manipulative state establishment of central bank and treasury which would continuously seek to achieve economic welfare objectives with comparatively little regard for the long term reputation of the national currency and the associated effects of that on the reputation of the financial enterprises domestic to the state."
In his "A Critique of the Science of the Keynesians" slide, Nash said that "the macroeconomics of the Keynesians is comparable to a scientific study of a mathematical area which is carried out with an insufficient set of axioms." Quoting Keynes himself, Nash stressed the "short-run" scope of Keynesian economics, which is inherently under-equipped to handle long-run economic scenarios. He furthered this emphasis by likening the philosophy to a sort of "school of medical theory" inclined towards "therapeutic procedures."
Nash also noted that "various interests and groups, notably including Keynesian economists, have sold to the public a quasi-doctrine which teaches, in effect, that less is more or that (in other words) bad money is better than good money."
Like Soludo beforehand, Nash brought into play the recurring motif of government intervention. In line with his criticism of Keynesian theory, Nash did not appear to be sympathetic towards the notion of a government-financed rescue.
"I get the impression that the government is not ready to do anything that is really beyond a short-term basis," Nash said.
Nash also detailed the philosophical, moral, evolutionary and Machiavellian dimensions of money.
In his "Digression on the Philosophy of Money" slide, Nash illustrates that, morally, money is often associated in "popular views" with "moral or ethical faults" such as "greed, avarice, selfishness and lack of charity." In this same slide, Nash also drew from cultural conceptions of morality in order to highlight some views of money in such contexts. Specifically, he describes the existence of money in accordance with Judeo-Christian conception as existing solely on account of man's fall from the undisturbed tranquility of the "Garden of Eden." From an Islamic perspective, Nash noted that money generated the effect of being pegged as "usury" if it involved "any lending of money at interest."
Due to time constraints, Nash's lecture ended before he had the chance to present all the sides. Nash subsequently retired to thunderous applause from the crowd of Flom auditorium. Salvatore promised that portions of his lecture would be available online sometime in the near future.
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