September 2022

Sun Mon Tue Wed Thu Fri Sat
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30  
Blog powered by Typepad

« Comparative Economics and Economies in Transition | Main | Russ Roberts Making Sense on the Trouble with Economic Stimulus Policy Packages »

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Greenspan was more straightforward when interviewed by Jon Stewart: "You didn’t need a central bank when we were on the gold standard, which was back in the nineteenth century. And all of the automatic things occurred because people would buy and sell gold, and the market would do what the Fed does now." More of that interview with my comments here:
http://divisionoflabour.com/archives/004047.php

How can the idea of (gradual?) abolition of the Fed and/or return to the gold standard be put forth in the mainstream without the "weirdness" with which the gold standard and other miss-conceptions regarding the Fed protecting the economy hurting the cause? When I talk to friends, the arguments that seem to come across most are (1) justice of the gold standard and absence of the Fed ("you pay only for what you desire or what you screw up, but you don't have to pay for other people's screw-ups" a la housing crisis), and (2) localization of any market failures. I am not an economist, do these sound like fair arguments to you? Could there be better arguments made for the layman?

Ali,

I believe it can be done by calling it "free banking" or "free market money", and not "the gold standard". Some simple statements in support of free banking might include:

1) The Fed should have to pay for its mistakes in creating the housing bubble. Since it is a government entity given a legislated monopoly, it is shielded from any blame.
2) If we had free banking, there would never have been a housing bubble because no currency could have had such low interest rates low and hope to compete against other currencies.
3) Why shouldn't people be able to use whatever they want as money?
4) Those with monopolies to create money inevitably abuse their power (e.g. Rome, Germany prior to WW2, the USA during and after every single major war).
5) The power to create bank notes was explicitly left out of the Constitution, because the framers of that document knew it would be abused.
6) Do we want the same people who gave us corn ethanol to give us money?

Grant,

Thanks a lot for the feedback.

I have a tape of Greenspan stating that he favors a return to the gold standard in the early ninties. He was speaaking to the Senate Banking Committee.

I think it is clear, however, that he could have done more to push for monetary reform. I think he did next to nothing. Just stating his views when asked.

The comments to this entry are closed.

Our Books