The Fed at 100
by Gerald P. O'Driscoll Jr.
Gerald P. O’Driscoll reviews the history of central banking. He argues decentralized banking is possible, but getting there will be difficult. Under a commodity money regime, central banks are neither necessary nor particularly dangerous, while under a fiat money regime, central banks are capable of exerting substantial influence on monetary policy. The Fed’s use of that influence has been, in O’Driscoll’s words, “unenviable.” Governments have come to depend on central banks to run deficits and spend more than they otherwise could. To do without central banking, however, we will first have to shrink the federal budget itself, and this will be no easy task.
The Fed’s Track Record
by Lawrence H. White
Lawrence H. White explains that the Federal Reserve has “dramatically increased secular inflation.” Additionally, it has increased price level uncertainty, while failing either to tame the business cycle or to reduce unemployment. Instead, throughout its history, it has bowed to political pressures and expanded the money supply again and again.
In Defense of a Flexible Monetary Policy
by Scott Sumner
Scott Sumner argues that monetary policy needs to respond to crises, and that commodity standards don’t meet that test. He argues that a politically independent central bank tasked with keeping a low rate of inflation will generally be able to fulfill that obligation, and that rigid monetary regimes do much greater harm when they ultimately collapse. In particular, the failures of such regimes have usually been attributed to free-market capitalism, and the result is ever-greater financial regulation.
Who Will Guard the Monetary Guardians?
by Jerry L. Jordan
Jerry L. Jordan argues that legislative restraints on monetary policy tend to fail; in this area, we just can’t trust government to watch itself. Standards intended to preserve the value of the currency have all fallen, as legislatures simply find it too convenient to siphon away value through inflation. Jordan is skeptical even of a balanced budget amendment, noting that state governments with such amendments have still come to fiscal grief. One of his most important concerns is that the public right now is dangerously apathetic about this underappreciated issue.
- No Rules Guiding Central Bank Actions by Jerry L. Jordan
- Good Compared to What? by Gerald P. O'Driscoll Jr.
- The Fed Was a Mistake. But Now That We Have It… by Scott Sumner
- The Fed Is Creating - and Exporting - Asset Price Inflation by Gerald P. O'Driscoll Jr.
- Asset Prices, Inflation, and Interest Rates by Scott Sumner
- How Do We Enforce Nominal GDP Targeting? by Gerald P. O'Driscoll Jr.
- The Fed’s Role in Eroding Real Federal Debt by Lawrence H. White
- Inflation is a Regressive Tax by Jerry L. Jordan
- Central Banks Can and Do Hit Inflation Targets by Scott Sumner
Conversation among all participants to follow soon.