Sunday, March 29, 2015
About Us
Please enter your email here, we would like to keep you informed.
Connect With Us - Facebook RSS
<March 2015>
Liberty In The News
Liberty Events
Conference Proceedings
Development is the Key
Economic Freedom
Education for Life
Freedom of Expression
Freedom to Trade
Globalization for the Good
Health is Wealth
Intellectual Property Rights
International Relations
Liberty is Security
Limited Government
Principles of Politics
Population - the ultimate resource
Property Rights
Regulatory Affairs
Rule of Law
Tax Freedom
Facts & Figures
 Economic Freedom
Failed Federal Reserve
Pittsburg Live
United States
Friday, November 26, 2010

Donald J. Boudreaux
Hayek wrote in 1960 that only the Government can supply the optimal amount of money. He later changed his position in 1976. If someone looks at it honestly, the power to print dollars and spend them as you wish will tend to be misused. Yet, this is the power which the United States Gopvernment possesses and delegate it to the Federal Reserve. The Federal Reserve control of money supply resulted in economic downturns including the recent one. Lawrence White's book "Free Banking" points out that the free banking experience is the past resulted in sound money, writes Donald Boudreaux in Pittsburg Live.
signs of a cheater link online
my wife emotionally cheated on me why do women cheat on husbands women who love to cheat
website why husband cheat

In his 1960 classic "The Constitution of Liberty," F.A. Hayek insisted that money can be supplied adequately only by government. By 1976, Hayek had changed his mind. In that year he published a monograph calling for (as its title reads) "The Denationalisation of Money."

Supplying money, Hayek argued from 1976 until his death in 1992, is best left to private banks competing against each other for deposits. Entrusting government with monopoly control over the single most important good in a market economy -- money -- is a recipe for catastrophe.

Ask yourself (and answer honestly): If you possessed exclusive power to print dollars and spend them as you wish -- and if you were allowed to imprison anyone who tried to compete with you in the money-supply business -- might you be tempted from time to time to pay your bills not by working harder, but by simply rolling a few thousand more dollars off your printing press? When choosing between buying a new car or a luxury vacation to Tahiti, might you rescue yourself from the need to make this choice by printing enough money so that you can buy both?

You see the temptation.

And yet such power over the money supply is precisely what Uncle Sam possesses.

Uncle Sam delegates that power to the Federal Reserve -- whose board of governors, fortunately, is insulated somewhat from politics. But only somewhat. The Fed, after all, was created by Congress, must report to Congress and from time to time is the subject of talk about being brought more directly under congressional control.

However, even if politics never enters into the decision-making of Fed officials, and even if those officials are guaranteed always to be the saintliest and most morally courageous human beings who ever breathed, having a monopoly money supplier is a very bad idea.

My George Mason University colleague Lawrence H. White and my former GMU colleague (now at the University of Georgia) George Selgin have devoted their prolific careers to studying the theory and history of central banking and its free-market alternatives.

White's book "Free Banking in Britain" explains how free-market money-issuing in Scotland during the 18th and 19th centuries resulted in remarkably sound money. Selgin's book "The Theory of Free Banking" explores in detail the reasons why competitive money issuers outperform a monopoly money issuer at supplying sound money and, hence, at avoiding problems sparked by too much (or too little) money creation.

Recently, White and Selgin (along with William Lastrapes) released a major study of the Fed's actual performance since its founding in 1913.The title of the paper explains well the questions these scholars ask: "Has the Fed Been a Failure?"

To sensibly answer this question requires a baseline against which the Fed's actual performance can be compared. The ideal baseline, regrettably, is impossible to determine. That baseline would be knowledge of how the economy of the past 97 years would have performed if the Fed had never been created.

Nevertheless, Selgin, Lastrapes and White present a convincing case that the Fed likely made the economy worse and not better than it would have been had America been spared a central bank.

The first and most obvious issue to examine is the value of the dollar. From 1790 until 1913, the dollar lost 8 percent of its value. Since the Fed's creation in 1913, however, the dollar has lost (so far) an additional 95 percent of its value. Given that one of the Fed's mandates is to maintain price stability, such inflation is hardly evidence of successful performance. Clearly, the Fed has undermined the dollar's value.

A Fed apologist might respond that a 95 percent loss of value over 97 years means that the average annual rate of inflation was quite modest. True. But this low average masks great volatility. Selgin and his co-authors found also that "The price level had ... become less rather than more predictable since the Fed's establishment." And, therefore, "as the Fed has gained greater control over long-run price level movements, those movements became increasingly difficult to forecast."

Given prices' important role in regulating consumer and investor actions, it's not surprising that Selgin, Lastrapes and White fail to find any evidence that the Fed has moderated swings in economic output.

Perhaps most significantly, the evidence also shows that Fed intervention has lengthened economic downturns -- such as the one we're currently in -- without reducing their severity (even if we exclude the Great Depression from the data!).

Finally, the evidence shows that the Fed has done nothing to reduce the frequency of bank failures.

The overall assessment by Selgin, Lastrapes and White is stark: "The Fed's failure has been chronic."

It's time we ponder more competitive alternatives to this monopoly central bank.

link open viagra 125 mg
viagra without prescription scams redirect open
husbands who cheat black women white men how to cheat on my husband
This article was published in the Pittsburg Live
on Friday, November 26, 2010. Please read the original article here.
Author : Prof Boudreaux is chairman of the Department of Economics at George Mason University in Fairfax, VA
signs of a cheater why husband cheat on their wife online
how many women cheat on husbands why people cheat in relationships link
open natural abortion abortion information
Tags- Find more articles on - free banking | lawrence white | selgin

Post your Comments on this Article

Comments will be moderated

More Related Articles
Economic Freedom
Indian Budget 2013 One step forward, One step backward
Politics of Power: Prospect for reforming the electricity sector
Pakistan: Has our banking system become unsound?
Retail giant bats for safe food and common sense
Public - Private Partnership: Will it Fix Infrastructure In Nigeria?<
Cleaning up Corruption: An agenda for India
Chasing Black Money: In search of red herrings
Endless populism: Economic insecurity or food security?
Big Boost to Big Retail Needed
More Articles

Liberty Partners
  20-22 July: Shanghai Austrian Economics Summit
  9th International Conference: Property Rights, Economics and Environment, June 20-23, Aix-en-Provence
  Alternate Solutions Insitutte
  Atlas Economic Research Foundation
  Freedom to Trade
  Friedrich Naumann Stiftung - Für Die Freiheit.
  India FNF Alumni Network
  Initiative for Public Policy Analysis
  Inter Region Economic Network (IREN)
  International Policy Network
  Liberty New Central
  Minimal Government Thinkers, Inc.
  The Adventures of Jonathan Gullible: A Free Market Odyssey
An Initiative of
All rights reserved.