Central Banking
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Against Interest Rate Reductionism
“Monetary policy is about money, not interest rates. Central bankers should stop trying to implement monetary policy by messing with relative prices. There are better measures and more effective transmission mechanisms.” ~ Alexander William Salter
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The Unquestioned Monopoly
“Despite the arguments made against monopoly and the arguments made in favor of competition, there is one monopoly that largely goes unquestioned. I’m referring, of course, to the monopoly over currency issuance.” ~ Joshua R. Hendrickson
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Financial Stability and the Fed
“The Fed failed at its initial task of promoting financial stability. It has failed at conducting monetary policy as well. Given the Fed’s major financial-policy and monetary-policy errors since 2008, we should explore major structural changes.” ~ Alexander William Salter
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Modeling the Money Supply
“We have to be very careful about generalizing across money and banking regimes. Many features of one system don’t translate to others. Depending on the ‘rules of the game,’ the supply of money responds to the price of money in very different ways.” ~ Alexander William Salter
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Federal Reserve Operating Losses and the Federal Budget Deficit
“In 2023, the Fed will likely report tens of billions of dollars in operating losses as it raises interest rates to combat raging inflation. Will Fed losses increase the budget deficit as logic dictates they should, or will they be treated as an off-budget expenditure?” ~ Paul H. Kupiec & Alex J. Pollock
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Understanding the Basics of Money Demand
“If nothing else, a cash-balances interpretation of the equation of exchange can help us better understand the relationship between the money supply and nominal income.” ~ Alexander William Salter
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The Fed Needs a Single Mandate
“A purchasing target would direct the Fed towards an achievable goal that would improve American households’ material wellbeing. Legislators from both parties should make a single Fed mandate a key part of their agendas.” ~ Thomas L. Hogan & Alexander William Salter
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Price Stability and Nominal GDP Targeting
“While we should not stubbornly insist on first-best policy if the second-best is all we can get, neither should we ignore the question of which policy is first-best. As long as we are reconsidering the Fed’s mandate, nominal GDP targeting should be on the table.” ~ Alexander William Salter
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Should the Federal Reserve Set its Own Goals?
“A target that is not determined solely by the Federal Reserve is less subject to changes solely due to deliberations at the Federal Reserve. It will enhance monetary policy’s effectiveness.” ~ Gerald P. Dwyer
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The Progressive Left and the Push to Reset the Federal Reserve’s Legal Mandates
“It is puzzling why former Federal Reserve officials have not vocally denounced these developments for what they are: a direct attack on capitalism, free market driven investment, and Federal Reserve independence.” ~ Paul H. Kupiec
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Price Stability and the Fed
“Politics is compromise. Half a loaf is better than no loaf at all. Price stability is the half-loaf of monetary policy rules. It seems foolish to go hungry simply because haute cuisine is unaffordable.” ~ Alexander William Salter
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There Are Good Reasons for Monetary Rules
“A good monetary rule does not only identify an appropriate course of action in advance. It also requires monetary policymakers to take that course and, in doing so, reduces the uncertainty businesses and consumers face.” ~ Nicolás Cachanosky
