Antal E. Fekete

Antal E. Fekete

Infobox Person
name = Antal E. Fekete

image_size = 200px
caption = Antal Fekete
birth_name = Antal E. fekete
birth_date = birth date and age|1932|01|01
birth_place = Budapest, EU
death_date =
death_place =
education = Loránt Eötvös University
occupation = Mathematician, Monetary Economist
spouse = Dr. Judith Szepesvári, economics.
parents =
known_for = Theory on the Origin of Interest, Theory on Hoarding, Theory on Speculation.
website = [ Professor Fekete]

Antal E. Fekete, Professor of Mathematics and Statistics, Memorial University of Newfoundland, is a proponent of the gold standard and critic of the current monetary system.

His theories fall into the school of economic thought led by Carl Menger. His support of the gold standard has similarities to Austrian Economics; however, Fekete's treatment of fractional-reserve banking is different from that of Murray Rothbard and Ludwig von Mises.


Antal E. Fekete was born in Budapest, Hungary, in 1932. He graduated from the Loránt Eötvös University of Budapest in mathematics in 1955. He left Hungary in 1956.

He immigrated to Canada and was appointed Assistant Professor at the Memorial University of Newfoundland in 1958. In 1993, after 35 years’ of service he retired with the rank of Full Professor.

During this period he also had tours of duty as visiting professor at Columbia University in the City of New York (1961), Trinity College, Dublin, Ireland (1964), Acadia University, Wolfville, Nova Scotia (1970), Princeton University, Princeton, New Jersey (1974).After retirement from active duties in 1995 Professor Fekete was Resident Fellow at the Foundation for Economic Education in Irvington-on-Hudson, New York. Following that he taught Austrian economics as Visiting Professor at the Francisco Marroquín University in Guatemala City in 1996. The same year he won the first prize of the essay competition of Bank Lips, Switzerland, with his entry [ Wither Gold ?] In 2001 he was appointed Consulting Professor at Sapientia University in Cluj-Napoca , Romania. Since 2005 he has been Professor at Large of [ Intermountain Institute for Science and Applied Mathematics (IISAM)] , Missoula, Montana. [Hugo Salinas Price [ About Prof. Fekete] , retrieved on July 2008] On 1 July 2008, Professor Fekete [ announced] that, due to funding constraints, his Gold Standard University Live lecture series will cease at the end of 2008. [ Farewell Address]


Professor Fekete is the author of "Real Linear Algebra" [ [ Real Linear Algebra (Pure and Applied Mathematics): Fekete: Books ] ] and other papers on mathematics. In preparation are his monographs "Quotient Set Theory and Stepnumbers" and "The Art of Precious Metals Trading ". The former is about a number system, invented by him, using infinitely many digits most economically. This means that ever larger numbers written in the form of stepnumbers will have the shortest possible string of digits (shorter, for example, than if written in the form of decimals). To be sure, there are other number systems also using infinitely many digits, but they are not as economical with their use of higher digits. The stepnumber system is the only one that does, in enumerating the natural numbers, postpone invoking the next higher digit as long as at all possible. It is the exact opposite of the binary number system at the other extreme of the spectrum, which has the fewest digits available, namely 0 and 1, but the numbers written in binary form have the longest string of digits. In this sense the binary system is the least economical number system.

Monetary research

Professor Fekete is an autodidactic on monetary economics. During his associations with various universities and institutions he has done research and lectured on economics. In 1984 Professor Fekete was invited by the American Institute for Economic Research in Great Barrington, Massachusetts, to spend a year as Visiting Fellow. He served as Editor of the Monograph Series of the Committee for Monetary Research and Education [ Committee for Monetary Research and Eduction website] , then headquartered in Greenwich, Connecticut, while contributing several monographs to the Series, reproduced on his website. [ for a list of Essays] He also acted as Senior Editor for the American Economic Foundation in Cleveland, Ohio, and produced a pamphlet series Ten Pillars of Sound Money. When in 1984 South Africa celebrated the 100th anniversary of discovering gold in the Witwatersrand, at the conference Gold 100 commemorating that event in Johannesburg Professor Fekete delivered the keynote address entitled Gold in the International Monetary System. He is an invited speaker for several institutions, delivering keynote addresses on monetary economics.

Real Bills Doctrine

Professor Fekete is a protagonist of the Real bills doctrine also going by the name of Quality Theory of Money. Conceived by Adam Smith, the Real Bills Doctrine is relevant to the world economy in the 21st century. Professor Fekete’s position can be summed up as follows : self-liquidating short-dated commercial paper on goods in most urgent demand by consumers will be indispensable in order to restore monetary stability in the world after a possible collapse of the regime of irredeemable currency. The solution is a worldwide gold coin standard cum real bills. Redeemable currency must flow and ebb together with the production of consumer goods moving to the market apace. Without real bills financing the economy would lack much-needed elasticity, and trade may even seize up causing depressions. Real bills would spring up and start circulating spontaneously. Banks would wither away as they could no longer trust each other’s promises, and no one would trust their promise to pay gold. Real bill circulation would overtake banking. However, present economic thinking, epithomised by J.M. Keynes, criticized the gold standard for being the cause of the depression. Real Bills (those maturing into gold coin, held by the final consumer) were suppressed by legislation, mainly in 1909 in France and Germany, obliging their civil servants to accept paper money in lieu of the gold coin of the realm as well as by the advent of World War I, destroying whatever trust was left between merchants worldwide. [ A Revisionist Theory of History and Money] The worldwide gold coin standard would seriously reduce government sizes and their ability to run large deficits. [Melchior Palyi, The Twilight of Gold, 1914-1939]

Discount vs Interest

Professor Fekete maintains that the influx of fresh monetary metal into an area is not inflationary and contends that it is a widespread academic myth. Pointing out the difference between discount and interest, emerging new gold will give rise to a diminishing discount rate on real bills. The real bills would be drawn on newly manufactured goods. Both goods and bills disappear from circulation, as soon as the final gold paying consumer withdraws his goods from the shop. A high discount rate would tend to draw gold to a region and a low discount rate would tend otherwise. If and when new gold purchasing media comes to the market, discount rates on real bills would drop. hence it unattractiveness for investors. Previously submarginal goods would as a result of the new purchasing media become marginal again. Manufacturing of new goods would emerge together with new gold. Real Bills are withdrawn from circulation after one season (being 91 days maximum). New purchasing media are therefor not inflationary. The assumption is an honest and publicly scrutinized discount system, rejecting the Acceptance House shelter or rollover practices of real bills and phantom goods, which would be inflationary. If prices of certain or all goods were rising under an unadulterated gold standard there would be another explanation, e.g. war.

Hexagonal Model of Capital Formation and Interest

Equilibrium Theory is one dimensional and flawed according to Fekete. Supply/Demand arguments, including the Quantity Theory of Money (M. Friedman, going back as early as R. Cantillon) are suspect as it does not stand up to scientific scrutiny. [Two views on the self-immolation of paper money] . Using a Mengerian disequilibrium model, Fekete maintains that there are two rates of interest : a floor and a ceiling rate. Under an unadulterated gold standard, the floor rate of interest is determined by the marginal time preference theory and the ceiling rate is determined by the marginal productivity of fixed capital. [Antal E Fekete ,Towards a Dynamic Microeconomics, Laissez-Faire (Universidad Franscisco Marroquin, Guatemala City) No 5, September 1996] [ Revue Bancaire, Brussels, November 2007, The Origin of Interest Revisited, published byt the National Bank] The same disequilibrium model is valid under a debt based monetary system, but the floor rate of interest is now determined by the marginal liquidity preference of bondholders (also going by the name of the yield curve). The ceiling rate is determined by the marginal productivity of speculation. [Gold Standard University Live Session Four, Szombathely, Hungary, Lecture 4 and 5, July 2008] Fekete contends that under an unadulterated gold standard, interest rate variations were mild and easily absorbed. During the period of the gold coin standard (although not entirely unadulterated), in use in a large portion of the world during almost 100 years since the beginning of the 19th century in what was known as the British Empire, interest rates and prices were amazingly comparable and stable among the participating countries. [Melchior Palyi, The Twilight of Gold, 1914-1939] . Under a debt based monetary system, however, interest rates are not stable and have been biassed downward especially since 1980. Whereas stable rates are acceptable for every protagonist under a gold coin standard, gyrating rates are destructive for capital providers. Mainstream economists maintain that lower rates are necessary to reflate the economy. Fekete contends that liquid capital, when dissatisfied with its remuneration, has been seeking better opportunities by expanding Eastwards (risk seeking capital) or by seeking shelter in the bond market (risk averse capital). [Revue Bancaire,Brussels, December 2007, published by the National Bank] . As far as the risk averse investors are concerned, their capital finds its way into the bond markets, hence the disproportionate size of both capital and bond markets. In macro-economics, this is called the liquidity trap.Most economists maintain that Western economies are evolving from a manufacturing into a service-economy. Fekete contends that the unstable interest rate regime destroys the industrial capital base of Western developped economies. The destruction takes two forms : a. new risk seeking entrants convert liquid capital into fixed capital but are trapped by ever lower rates, and incur opportunity costs. Only few economic participants are able to renegotiate lower rates with financiers or issue reverse convertible bonds. b.Older participants realise they cannot compete with new entrants locally or abroad who financed their plant at lower rates - their role is reduced to price takers - and are eventually forced to convert fixed capital back to liquid capital, taking losses and shedding their labor complement in the process. The risk averse investor is in the majority and shelters his capital in the government bond market, withholding much needed equity from the economic scene. [Gold Standard University Live Session Four, Szombathely, Hungary, July 2008] [The Case Against Taxation under Fiat Money, A Master Thesis by P. Van Coppenolle, BCom LLB, Johannesburg, MBA Brussels, 2008]

Basis Trading

Fekete disputes the "naked shorting" of precious metals markets. He contends that holders of monetary metal are to a large extend professional and are using the futures market to hedge their physical long positions with an equivalent short in the futures market, in much the same way as a grain elevator operator. The offsetting of long positions with short futures would only appear to be naked, as participants to the futures market are under no obligation to divulge their hedge. [ Gold Standard University Live Session V, Canberra, Australia] [] The long time contango of the futures market is what provides metal holders (longs) with an income. This type of professional trading is known as Basis Trading. If spot prices of gold or silver are permanently above their futures price, the precious metals market is going into permanent backwardation. According to Fekete, the silver market being more volatile and narrower, once going into permanent backwardation, will function as an early warning system for the end of the fiat currency system.


It may be noted that mainstream economic theorists criticize gold standard-oriented monetary economists and vice-versa. Professor Fekete has several points of criticism against mainstream economics, the main being that equilibrium models are not fitting for a highly non-linear world. Instead he proposes a disequilibrium theory, based on Mengerian principles of conversion. Other criticism may be summarised as the teleologal use of econometrics by economists and the disingenious treatment of any research on the gold standard. [] Most criticism levelled against Fekete originates from Austrian Economists. [] []


Fekete's contribution to the development of economic thought is his Theory on the Formation and Origin of Interest, on Hoarding and on Speculation. By merging the Time Preference Theory on the Origin of Interest with the Productivity of Capital, resulting in what he calls a Hexagonal Model, Fekete maintains that economic thinking has been enriched, since the above has been missing in both Austrian and traditional economic thought. [ The Hexagonal Model of Capital Markets] [Money Upside Down- A Paradigm Shift in Economics and Monetary Theory, Doctoral Thesis by Harald Haas, 2003, University of Bremen] [The Case Against Taxation under Fiat Money, A Master Thesis by P. Van Coppenolle, BCom LLB Johannesburg, MBA Brussels, 2008] [Ferdinand Lips Gold Wars: The Battle Against Sound Money as Seen From A Swiss Perspective (Foundation for the Advancement of Monetary Education, 2001) 304 pages/ ISBN 0-9710380-0-7]

His contribution to the science of mathematics is his development of stepnumbers, a number system using infinitely many numbers most economically, the opposite of the binary number system.


* "Real Linear Algebra" (Januari 25, 1985) (ISBN 978-0824772383).
* "The Paradox of interest revisited" (Revue Bancaire, Brussels, September 2007, published by the National Bank)
* "Interest and Discount" (Revue Bancaire, Brussels, November 2007, published by the National Bank)
* "Borrowing Short and Lending Long : Illiquidity and Credit Collapse" (Monograph, Committee for Monetary Research and Education, unknown binding, 1983)
* "Resumption of Gold Convertibility of The US Currency" (Monograph, Committee for Monetary Research and Education, unknown binding, 1984)
* "Irredeemable Currency : The Destroyer of Capital" (Monograph, Committee for Monetary Research and Education, unknown binding, 1985)
* "Deflation: Retrospect and Prospect" (Monograph, Committee for Monetary Research and Education, unknown binding, 1986)
* "Signature of Partitions and Divisors" (unknown binding, 1965)
* "Substitution of Power Series" (unknown binding, 1965)


ee also

* Austrian Economics
* Keynesian Economics

External links

* [ Professor Fekete's website]
* [ American Institute for Economic Research ]

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