Alexander W. Salter
Interest Rates, Funny Money, and Economic Malaise
There is growing support for the idea that meddling with market interest rates is a bad idea. Interest rates coordinate intertemporal production plans, and any attempt to alter them will entail undesirable unintended consequences.
The Federal Reserve: A Failure of the Rule of Law
The Fed has a monopoly on the creation of base money, the fundamental asset underlying the banking and financial system. And over decades, with each instance of financial turbulence, the Fed has become less constrained in how, when, and why it creates base money.
A Failure to Communicate
Central banking should be boring. Surprises in the stance of monetary policy are almost always a bad thing. The best thing a central bank can do to achieve macroeconomic stability is to be very open about its future intended policies.
The Fed is Hostile to a Self-Governing Society
While it is appropriate for monetary policy to be removed from active political interference, it does not follow that monetary policy ought not be judged according to democratic standards.
Free Societies Don’t Need the Fed’s Managers
The public discourse concerning the state of the financial system that once took place in trade associations and committees of concerned citizens has disappeared, replaced by a cold and sterile managerialism practiced by an insular and self-perpetuating macroeconomic elite.
The Adaptive Value of Monetary Technocracy
When considering why central bankers do what they do, we often focus on their intentions or motivations. Instead, we should look for patterns of behavior that have adaptive value within the context central banking.
Did Bernanke’s Fed Follow Bagehot’s Rules?
Bagehot’s rules are ultimately geared toward assisting illiquid financial organizations but allowing insolvent ones to fail. The Fed went out of its way to support insolvent organizations.
The Difference Between Micro- and Macro-economics
We must recognize that a whole may exhibit properties that are not present in its parts. But problems come in when the method of study for the economy as a whole looks radically different from that used for its parts.
Central Banks and Self-Governance: The Argument from Delegation
Would a self-governing society ever choose to delegate the broad monetary, financial, and regulatory powers now enjoyed by central banks?
Monetary Institutions and Self-Governance
The features of monetary institutions that make them illiberal have a high likelihood of making them undemocratic as well.
