cato-journal-v34n2

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Cato JournalScott B. Sumner advocates rules rather than discretion in the conductof monetary policy. His preferred rule is to target nominal GDPrather than inflation or the price level.Since the Panic of 2007, the Fed’s balance sheet and power haveexpanded dramatically. The Fed’s ultra-low interest rates and quantitativeeasing have distorted capital markets, increased risk taking,politicized credit allocation, monetized government debt, andallowed the government to expand its size and scope. Moreover, theFed’s regulatory powers have increased uncertainty and dampenedthe disciplinary forces of private free markets.Rep. Jeb Hensarling, the chairman of the House FinancialServices Committee, pledges to conduct hearings to hold the Fedaccountable and help improve its performance. John A. Allison drawson his experience as chairman and CEO of BB&T Corporation todiscuss the unintended adverse consequences of top-down financialregulation as opposed to the spontaneous positive results of marketbaseddiscipline, given the appropriate institutional frameworkmaking individuals responsible for their actions. Kevin Dowd andMartin Hutchinson look at the institutions that helped mitigate moralhazard and harmonize financial markets in the pre-Fed era and comparethem to changes in the financial architecture since the creationof the Fed. Their main conclusion is that competitive markets boundby laws of contract and an overarching rule of law that protectsprivate property rights provide incentives to manage risk and avoidthe problem of “too big to fail”—a central bank and hordes ofgovernment regulators do not.Rep. Kevin P. Brady, chairman of the Joint Economic Committee,makes the case for a bipartisan Centennial Monetary Commission toexamine the Fed’s history and consider alternatives to pure discretionarygovernment fiat money. He takes seriously the constitutionalmandate for Congress to ensure stable-valued money. Gerald P.O’Driscoll Jr. considers the prospects for fundamental monetaryreform and the strategies to promote such reform. R. David Ransonargues that the Fed’s overreliance on conventional statistics to guideits policy and its politicization have led to failed policies. In particular,by distorting interest rates and trying to “stimulate” the economy,the Fed has actually slowed recovery. Ultimately, real reform of themonetary and financial system requires that voters understand thelimits of central banking and the benefits of limited government andfree markets.
Editor’s NoteIn the final article, Lewis E. Lehrman, a member of the PresidentRonald Reagan’s Gold Commission in 1981, makes a compelling casefor returning to a classical gold standard, not only to protect thepurchasing power of the dollar but to prevent the federal governmentfrom using the printing press to pay its bills.It is hoped that these articles will stimulate debate about thechoice of monetary arrangements consistent with a free society,individual responsibility, and the constitutional call for Congress tosafeguard the purchasing power of the dollar.—J. A. Dorn
Page 1: AN INTERDISCIPLINARY JOURNAL OF PUB
Page 4 and 5: The Cato Journal (ISSN 0273-3072) i
Page 6 and 7: Kevin Dowd and Martin HutchinsonHow
Page 11 and 12: A Limited Central BankCharles I. Pl
Page 13 and 14: Fed Goals and ObjectivesA Limited C
Page 15 and 16: A Limited Central Bankill-suited to
Page 17 and 18: A Limited Central Bankdetermining e
Page 19 and 20: A Limited Central BankTreasury-Fed
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Page 24 and 25: Cato Journalprominent personalities
Page 26 and 27: Cato Journaleconomic policymaking r
Page 28 and 29: Cato Journal“Carter bonds” deno
Page 30 and 31: Cato Journalinflation, the real int
Page 32 and 33: Cato Journalcommittee bias to focus
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Page 36 and 37: Cato Journalcompanies, and even non
Page 39 and 40: Operation Twist-the-Truth:How the F
Page 41 and 42: Operation Twist-the-TruthTo support
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Page 45 and 46: Operation Twist-the-Truthcapital. C
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Page 49 and 50: Operation Twist-the-TruthIn short,
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Page 55 and 56: Operation Twist-the-TruthAnd so it
Page 57 and 58: Operation Twist-the-TruthBernanke e
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Operation Twist-the-TruthStearns li
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Operation Twist-the-TruthAlready we
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Operation Twist-the-Truthfinancial
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Operation Twist-the-Truthcrisis rec
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Operation Twist-the-Truthtaken at a
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Operation Twist-the-TruthBorio, C.,
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Operation Twist-the-TruthHammond, B
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Operation Twist-the-Truth(2008) “
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Cato Journalvery existence of a nat
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Cato Journalthings beyond its contr
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Cato Journalpolicy target. Unlike p
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Cato JournalFIGURE 1Price Stability
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Cato Journalsubsequent quarters as
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Cato JournalFIGURE 4Output Gap Revi
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Cato JournalConclusionThe unprecede
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The Troubling Suppression ofCompeti
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Alternative MoniesThe potential alt
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Alternative Monies§486, and is a c
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Alternative MoniesIn December 2012,
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Alternative Moniesknown as OmniPay,
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Alternative MoniesCaribbean nation
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Alternative Moniesstatute, 31 USC
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Alternative Moniesof community serv
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Alternative Monieslicense what he c
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Alternative Moniesmoney-transmittin
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Alternative MoniesSmith, V. C. ([19
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Cato Journalchanges in the demand f
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Cato Journalwere in denominations o
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Cato Journalsubstitutes for currenc
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Cato Journalconvert bank notes or d
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Cato Journalcentral money market [i
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Cato JournalSeligman, E. R. A., ed.
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Cato JournalThe Gold StandardIt is
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Cato Journalthe discipline of such
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Cato JournalRobert Hetzel (2009, 20
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Cato JournalLehman Brothers failed.
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Cato Journala level path or a sligh
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Cato Journallate 2007 and early 200
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Cato Journalpolicy affecting inflat
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Cato Journalinterprets as calling f
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Cato Journalhelp to restore policym
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Cato JournalAn almost identical seq
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Cato JournalHall, R. (2010) “Why
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Fed versus Market RegulationJeb Hen
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The Fed’s Dual MandateFed versus
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Fed versus Market RegulationAct’s
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Market Discipline BeatsRegulatory D
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Market Disciplinederegulated under
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Market Disciplinealways involve som
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The Free-Market SolutionMarket Disc
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How Should Financial MarketsBe Regu
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Financial Marketsmade the financial
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Financial Marketsand the regulatory
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Financial MarketsGlass-Steagall Act
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Financial MarketsWe have intentiona
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Financial Marketsbut it worked—an
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Financial Marketssystem less rather
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Financial Marketsreturn but the ban
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Financial MarketsAgain, there is no
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Financial MarketsBasel II—and, th
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Financial Marketsinvolving means. I
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Financial Marketsclient funds throu
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Financial MarketsFinancial Regulati
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Financial Marketsthat the pieces up
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Financial Marketstogether that thos
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Financial MarketsThey persist becau
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Financial Marketsa perfect example
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Financial MarketsCalomiris, C. W. (
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The Case for a CentennialMonetary C
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Centennial Monetary Commission• A
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Centennial Monetary CommissionOther
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Prospects for FundamentalMonetary R
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Fundamental Monetary Reforminto the
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Fundamental Monetary Reform1920s, t
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Fundamental Monetary Reformexistenc
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Fundamental Monetary Reformthe mone
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Fundamental Monetary ReformWhite, L
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Cato Journalinherently ineffective.
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Cato JournalThe gasoline market in
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Cato Journalcrisis or economic mala
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Cato Journalfor goods, especially t
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The Federal Reserve and the DollarL
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Federal Reserve and the Dollarthe i
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Federal Reserve and the Dollarsmall
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Federal Reserve and the Dollarinfla
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Federal Reserve and the Dollarmoney
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Federal Reserve and the Dollarexcha
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Federal Reserve and the Dollarcurre
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Federal Reserve and the Dollarunder
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Federal Reserve and the Dollar([195
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Cato JournalStarting with patrols i
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Cato JournalForeign Policy Begins a
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Cato Journalresolve to its friends
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Cato Journaladvocate policies that
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Cato Journalrules will achieve desi
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Cato Journalsituation that preclude
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Cato Journalgovernment policies rew
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Cato Journal18 times in the book, w
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NEW EBOOK FROM THE CATO INSTITUTETh
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How does the United States once aga
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Education is important to everyone.
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December 2012On the Kindle app for
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$8 00STABLE MONEY AND COMMERCEIt is
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