Tuesday, December 1, 2015

Robert Wenzel on the Cato Monetary Conference

Over at the Mises Institute, David Gordon has some nice things to say about my recent post, Madmen at the Cato Conference.

He writes:
Robert Wenzel on the Cato Monetary Conference

The well-known libertarian economic journalist Robert Wenzel has written a post that would have delighted Murray Rothbard. Wenzel discusses a recent Monetary Conference held at the Cato Institute. “Under the direction of the billionaire Koch brothers, the institute appears to have drifted so far from its roots that it is barely recognizable as the libertarian institution it once was. Now, monetary conferences are held where no one, that is no one, discusses business cycle theory from an Austrian School perspective, where no one discusses the madness of Federal Reserve money manipulation.”

Wenzel supports his harsh verdict with a detailed account of the conference. The dominant thrust of the speakers was that the Fed should aim at price stability rather than more ambitious goals such as economic growth; and in doing so, it should follow a policy of fixed rules. “Cato senior fellow Gerald O’Driscoll suggested that the knowledge problem explains why rule-based monetary policy is superior to central bank discretion — we don’t know enough to design an optimal monetary policy, so we’re better off using rules to create a monetary order and anchor expectations.”

For Rothbard, the correct monetary policy was of course to end the Fed and restore the gold standard. He was not satisfied with attempts at incremental improvements which accepted as given the framework of the Fed.

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