Monetary Policy

Inflation Is the Last Thing We Need

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“Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment,” the New York Times reports. One is Harvard economist Kenneth S. Rogoff, quoted in the Times: “Weighed against the political, social and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained ... [click for more]

Delete the Fed

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Who should run the Federal Reserve System when chairman Ben Bernanke’s term expires next year: Vice Chair Janet Yellen or former Obama adviser Lawrence Summers? Neither. Who then? No one. The fact is, we need the Federal Reserve like we need a hole in the head. Contrary to folklore, the Fed is not needed to stabilize the economy or to prevent unemployment. As ... [click for more]

Should the Purchasing Power of Money Be Stabilized?

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Economists have long debated the costs and benefits of stabilizing the purchasing power of money. Today, most First World countries’ central banks either pursue the stabilization of purchasing power as a primary goal, as in the case of the European Central Bank (technically, the stabilization of the rate of change of money’s purchasing power, by means of an inflation ... [click for more]

Deflation, Liquidation, and Necessary Revisionism

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During his ill-fated 1932 reelection campaign Herbert Hoover delivered a speech in which he said, In the midst of this hurricane the Republican administration kept a cool head, and it rejected every counsel of weakness and cowardice. Some of the reactionary economists urged that we should allow the liquidation to take its course until it had found its own bottom. ... [click for more]

QE Forever and John Q. Public

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The Federal Reserve’s Open Market Committee (FOMC) has voted to launch a third round of quantitative easing (QE3), this time focused on purchasing as much as $40 billion a month in mortgage-backed securities. This decision to provide liquidity ad infinitum could add nearly half a trillion to the Fed’s balance sheet annually and hold the federal-funds rate near zero ... [click for more]

The GOP’s Gold Plank

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The 2012 Republican Party platform contains a plank concerning a possible return to the gold or other metallic standard. The US dollar has been a fiat currency since President Richard Nixon suspended its convertibility to gold on August 15, 1971. The plank reads, Determined to crush the double-digit inflation that was part of the Carter Administration’s economic legacy, President Reagan, shortly ... [click for more]

The Roots of America’s Financial Crises

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Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen (Hoboken, New Jersey: Wiley, 2010); 393 pages. It is obvious by now that the massive U.S. debt cannot be sustained. Last year’s downgrading by Standard and Poor’s of the U.S. government’s credit rating is but the latest signal that the Obama administration’s policy of an ever-expanding ... [click for more]

The Prospects for Sound Money

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A silver lining of the global economic crisis is that millions of people have been awakened to the importance of sound money to a modern economy. The housing bubble and subsequent bust, excessive leveraging, reckless speculation, and the sovereign-debt crisis afflicting Europe and the United States would all have been averted had money been commodity-based (e.g., gold and silver) ... [click for more]

The Debt Crisis and Fiat Money

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The European Union (EU) has a sovereign-debt problem. Greek government bonds have been downgraded to junk status, and there is talk of default. Italy, Spain, and Portugal appear to be next, as they face skyrocketing interest rates just when their governments must borrow more to service their debt. Should these countries default, some of Europe's largest banks which are heavily ... [click for more]

Central Planning at the Federal Reserve

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While it is understandable that inflation hawks keep a close watch on the Federal Reserve’s money-creation activities, an equally worrisome Fed activity is taking place right under their noses. Whether or not the Fed is expanding the money supply, it has undoubtedly moved into a new activity under cover of addressing the financial crisis and recession: central planner of ... [click for more]
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