Liberal Monetary Policy Bill – EconLib

I am interested in writing a critique of libertarian monetary ideas. (I already have one criticizing MMT.) But first I’d like to get a better idea of ​​what those concepts actually are. Thus I would appreciate any comments you have on the best places to find a summary of these ideas.

Let’s start with “Cancel the Fed”, an idea I see mentioned in various settings. In some cases, it is not difficult to imagine what people mean by the word “extinct”. That way if people say abolish the FDIC, I believe I’ll know exactly what they mean. But will the Fed cancel? That can mean one of many different things. The devil is in the details, especially the transition from here to there.

Much of the uncertainty is related to the condition of base money (especially currencies), as well as debt instruments that promise to pay $X dollars of base money at a specified future time. Does canceling the Fed mean canceling the US dollar? It seems unlikely; How will our dollar value debt be repaid?

Perhaps the proposal is to peg the US dollar to a fixed rate of gold and then allow private companies to issue banknotes. To me, that seems like the most likely way to repeal the Fed. In that case, it would make more sense to describe the proposal in a positive sense—say define the dollar as X gold grains—in a negative way (abolish the Fed).

A libertarian might say that they are not wedded to the gold standard, and that the market should decide which system works best. OK, but then what do we do with all the debt in US currency and dollars? Am I missing something?

What are some other libertarian financial ideas? I have come across the following ideas in various places:

1. Inflation targeting is a bad idea, as it is a form of price control.

2. NGDP targeting is a bad idea, as it is a form of central planning.

3. The effect of monetary policy depends a lot on who gets the money first.

4. In recent decades the Fed has been artificially controlling interest rates, usually keeping them below equilibrium.

5. Fed policy artificially raises asset prices, often creating asset price bubbles.

6. In a free market, private currencies will displace the US dollar.

I am in a rather strange position. I see these ideas as mostly or completely wrong. And yet I see myself as a libertarian and my own view of monetary policy as relatively libertarian.

So please help me. Am I ignoring liberal ideas? Did I get something wrong? And how exactly will the abolition of the Fed be carried out?

Leave a Reply

Your email address will not be published.