Monetary Policy Quotes

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

Boom/bust cycles are not inevitable and would not occur were it not for the inflationary monetary policies that always precede recessions.

If something is wrong for you or me, it is also wrong for the cop, the soldier, the mayor, the governor, the general, the Fed chairman, the president. Theft does not become acceptable when they call it taxation, counterfeiting when they call it monetary policy, kidnapping when they call it the draft, mass murder when they call it foreign policy. We understand that it is never acceptable to wield violence nor the threat of violence against the innocent, whether by the mugger or the politician.

The theory of economic shock therapy relies in part on the roleof expectations on feeding an inflationary process. Reining in inflation requires not only changing monetary policy but also changing the behavior of consumers, employers and workers. The role of a sudden, jarring policy shift is that it quickly alters expectations, signaling to the public that the rules of the game have changed dramatically - prices will not keep rising, nor will wages.

Inflation is always and everywhere a monetary phenomenon.

This book (Jarod Kintz's book) is trash. I mean, I assume it is, because that's where I found it while scrounging for lunch. However, I must admit that I haven't read it. I would have, but I am homeless, mainly due to my illiteracy (though Big Government, Keynesian monetary policy, and my struggle with alcoholism certainly played a large role).

Almost as an article of faith, some individuals believe that conspiracies are either kooky fantasies or unimportant aberrations. To be sure, wacko conspiracy theories do exist. There are people who believe that the United States has been invaded by a secret United Nations army equipped with black helicopters, or that the country is secretly controlled by Jews or gays or feminists or black nationalists or communists or extraterrestrial aliens. But it does not logically follow that all conspiracies are imaginary. Conspiracy is a legitimate concept in law: the collusion of two or more people pursuing illegal means to effect some illegal or immoral end. People go to jail for committing conspiratorial acts. Conspiracies are a matter of public record, and some are of real political significance. The Watergate break-in was a conspiracy, as was the Watergate cover-up, which led to Nixon’s downfall. Iran-contra was a conspiracy of immense scope, much of it still uncovered. The savings and loan scandal was described by the Justice Department as “a thousand conspiracies of fraud, theft, and bribery,” the greatest financial crime in history. Often the term “conspiracy” is applied dismissively whenever one suggests that people who occupy positions of political and economic power are consciously dedicated to advancing their elite interests. Even when they openly profess their designs, there are those who deny that intent is involved. In 1994, the officers of the Federal Reserve announced they would pursue monetary policies designed to maintain a high level of unemployment in order to safeguard against “overheating” the economy. Like any creditor class, they preferred a deflationary course. When an acquaintance of mine mentioned this to friends, he was greeted skeptically, “Do you think the Fed bankers are deliberately trying to keep people unemployed?” In fact, not only did he think it, it was announced on the financial pages of the press. Still, his friends assumed he was imagining a conspiracy because he ascribed self-interested collusion to powerful people. At a World Affairs Council meeting in San Francisco, I remarked to a participant that U.S. leaders were pushing hard for the reinstatement of capitalism in the former communist countries. He said, “Do you really think they carry it to that level of conscious intent?” I pointed out it was not a conjecture on my part. They have repeatedly announced their commitment to seeing that “free-market reforms” are introduced in Eastern Europe. Their economic aid is channeled almost exclusively into the private sector. The same policy holds for the monies intended for other countries. Thus, as of the end of 1995, “more than $4.5 million U.S. aid to Haiti has been put on hold because the Aristide government has failed to make progress on a program to privatize state-owned companies” (New York Times 11/25/95). Those who suffer from conspiracy phobia are fond of saying: “Do you actually think there’s a group of people sitting around in a room plotting things?” For some reason that image is assumed to be so patently absurd as to invite only disclaimers. But where else would people of power get together – on park benches or carousels? Indeed, they meet in rooms: corporate boardrooms, Pentagon command rooms, at the Bohemian Grove, in the choice dining rooms at the best restaurants, resorts, hotels, and estates, in the many conference rooms at the White House, the NSA, the CIA, or wherever. And, yes, they consciously plot – though they call it “planning” and “strategizing” – and they do so in great secrecy, often resisting all efforts at public disclosure. No one confabulates and plans more than political and corporate elites and their hired specialists. To make the world safe for those who own it, politically active elements of the owning class have created a national security state that expends billions of dollars and enlists the efforts of vast numbers of people.

In fiscal policy as in monetary policy, all political considerations aside, we simply do not know enough to be able to use deliberate changes in taxation or expenditures as a sensitive stabilizing mechanism.

For the same reason a disease cannot be cured by more of the germ that caused it, the inflation and debt accumulation of the Obama years will not inflate our way out of it.

it (government) can't run out of dollars any more than a carpenter can run out of inches.

Thus, increases in interest rates matter greatly for the economy as a whole. They not only cause direct reductions in investment spending and interest-sensitive consumption spending (the main intent of restrictive monetary policy), but they also may reduce aggregate demand indirectly through their impact on asset prices.

Myth: Bernanke Fed is committed to stimulus until a recovery occurs. Fact: The current monetary policy assures further capital destruction

No government can successfully achieve all three goals of having a fixed foreign exchange rate, free capital flows, and an independent monetary policy.

Inflationism is that monetary policy that seeks to increase the quantity of money.

Inflation via loose monetary policy is in effect a tax, but one that does not have to be legislated and that tends to hurt ordinary people more than elites with real rather than monetary assets.

If not interest rates or monetary policy, then what? Most research on the origins of the bubble has focused on three factors: mass psychology; financial innovations that reduced the incentive for careful lending;

The harder a government, such as a dictatorship, tries to maintain monetary policy autonomy, the more it must either limit the movement of capital into and outside of the country, or the more it must compromise exchange-rate stability.

The problem with fiat is that simply maintaining the wealth you already own requires significant active management and expert decision-making. You need to develop expertise in portfolio allocation, risk management, stock and bond valuation, real estate markets, credit markets, global macro trends, national and international monetary policy, commodity markets, geopolitics, and many other arcane and highly specialized fields in order to make informed investment decisions that allow you to maintain the wealth you already earned. You effectively need to earn your money twice with fiat, once when you work for it, and once when you invest it to beat inflation. The simple gold coin saved you from all of this before fiat.

He who cares to go to the trouble of demonstrating the uselessness of index numbers for monetary theory and the concrete tasks of monetary policy will be able to select a good proportion of his weapons from the writings of the very men who invented them.

Shortcomings in the governments’ handling of monetary matters and the disastrous consequences of policies aimed at lowering the rate of interest and at encouraging business activities through credit expansion gave birth to the ideas which finally generated the slogan “stabilization.” One can explain its emergence and its popular appeal, one can understand it as the fruit of the last hundred and fifty years’ history of currency and banking, one can, as it were, plead extenuating circumstances for the error involved. But no such sympathetic appreciation can render its fallacies any more tenable.

the International Monetary Fund basically acted as the world’s debt enforcers—“You might say, the high-finance equivalent of the guys who come to break your legs.” I launched into historical background, explaining how, during the ’70s oil crisis, OPEC countries ended up pouring so much of their newfound riches into Western banks that the banks couldn’t figure out where to invest the money; how Citibank and Chase therefore began sending agents around the world trying to convince Third World dictators and politicians to take out loans (at the time, this was called “go-go banking”); how they started out at extremely low rates of interest that almost immediately skyrocketed to 20 percent or so due to tight U.S. money policies in the early ’80s; how, during the ’80s and ’90s, this led to the Third World debt crisis; how the IMF then stepped in to insist that, in order to obtain refinancing, poor countries would be obliged to abandon price supports on

The excellence of metallic money in free circulation consists in the fact that it renders impossible the abuse of the power of the government to dispose of the possessions of its citizens by means of its monetary policy and thus serves as the solid foundation of economic liberty within each country and of free trade between one country and another.

The central lesson of the COVID-19 fiscal response is that money is not scarce. Without delay, governments around the world appropriated budgets that dwarfed any other post-war crisis policy.

Restrictionistic ideas have never met with any measure of popular sympathy except after a time of monetary depreciation when it has been necessary to decide what should take the place of the abandoned inflationary policy.

The oldest and most popular instrument of etatistic monetary policy is the official fixing of maximum prices. High prices, thinks the etatist, are not a consequence of an increase in the quantity of money, but a consequence of reprehensible activity on the part of 'bulls' and 'profiteers'; it will suffice to suppress their machinations in order to ensure the cessation of the rise of prices. Thus it is made a punishable offence to demand, or even to pay, 'excessive' prices.

Hamilton, wanting the bank to remain predominantly in private hands, advanced a theory that became a truism of central banking—that monetary policy was so liable to abuse that it needed some insulation from interfering politicians: “To attach full confidence to an institution of this nature, it appears to be an essential ingredient in its structure that it shall be under a private not a public direction, under the guidance of individual interest, not of public policy.” 18 At

Ever since the 2008 global financial crisis, central banks had ventured, not by choice but by necessity, ever deeper into the unfamiliar and tricky terrain of “unconventional monetary policies.” They floored interest rates, heavily intervened in the functioning of markets, and pursued large-scale programs that outcompeted one another in purchasing securities in the marketplace; to top it all off, they aggressively sought to manipulate investor expectations and portfolio decisions.

For fiscal policy, the appropriate counterpart to the monetary rule would be to plan expenditure programs entirely in terms of what the community wants to do through government rather than privately, and without any regard to problems of year-to-year economic stability; to plan tax rates so as to provide sufficient revenues to cover planned expenditures on the average of one year with another, again without regard to year-to-year changes in economic stability; and to avoid erratic changes in either governmental expenditures or taxes.

If the State uses this power systematically in order to force the community to accept a particular sort of money whose employment it desires for reasons of monetary policy, then it is actually carrying through a measure of monetary policy. The States which completed the transition to a gold standard a generation ago, did so from motives of monetary policy. They gave up the silver standard or the credit-money standard because they recognized that the behaviour of the value of silver or of credit money was unsuited to the economic policy they were following.

As long as there are no routes back to full employment except that of somehow restoring business confidence, he pointed out, business lobbies in effect have veto power over government actions: propose doing anything they dislike, such as raising taxes or enhancing workers' bargaining power, and they can issue dire warnings that this will reduce confidence and plunge the nation into depression. But let monetary and fiscal policy be deployed to fight unemployment, and suddenly business confidence becomes less necessary, and the need to cater to capitalists' concern is much reduced.

The boom brought about by the banks’ policy of extending credit must necessarily end sooner or later. Unless they are willing to let their policy completely destroy the monetary and credit system, the banks themselves must cut it short before the catastrophe occurs. The longer the period of credit expansion and the longer the banks delay in changing their policy, the worse will be the consequences of the malinvestments and of the inordinate speculation characterizing the boom; and as a result the longer will be the period of depression and the more uncertain the date of recovery and return to normal economic activity

What with the doctrines that are now widely accepted and the policies accordingly expected from the monetary authorities, there can be little doubt that current union policies must lead to continuous and progressive infl ation. The chief reason for this is that the dominant “fullemployment” doctrines explicitly relieve the unions of the responsibility for any unemployment and place the duty of preserving full employment on the monetary and fiscal authorities. The only way in which the latter can prevent union policy from producing unemployment is, however, to counter through inflation whatever excessive rises in real wages unions tend to cause.

The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do. … Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession. “It puts monetary policy out of the reach of politicians,” [Robert] Mundell explained]. “Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.” … Hence, currency union is class war by other means. — Greg Palast, “Robert Mundell, evil genius of the euro.” Unlike

The only solution was to tie the hands of macroeconomic policy makers.7 Instead of giving the Federal Reserve discretion to trade lower unemployment for higher inflation, the central bank should be forced to accept the fact that a certain amount of unemployment was necessary to keep inflation stable. As we will see, MMT contests this framework.

The collapse of an inflation policy carried to its extreme -- as in the United States in 1781 and in France in 1796 -- does not destroy the monetary system, but only the credit money or fiat money of the State that has overestimated the effectiveness of its own policy. The collapse emancipates commerce from etatism and establishes metallic money again.

For NED and American neocons, Yanukovych’s electoral legitimacy lasted only as long as he accepted European demands for new ‘trade agreements’ and stern economic ‘reforms’ required by the International Monetary Fund. When Yanukovych was negotiating those pacts, he won praise, but when he judged the price too high for Ukraine and opted for a more generous deal from Russia, he immediately became a target for ‘regime change.’ Thus, we have to ask, as Mr Putin asked - ‘Why?’ Why was NED funding sixty-five projects in one foreign country? Why were Washington officials grooming a replacement for President Yanukovych, legally and democratically elected in 2010, who, in the face of protests, moved elections up so he could have been voted out of office - not thrown out by a mob?

Keynes argued that when short-term and long-term interest rates had reached their respective lower bounds, further increases in the money supply would just be absorbed by the hoarding of money and would not lead to lower interest rates and higher spending. Once caught in this liquidity trap, the economy could persist in a depressed state indefinitely. Since economies were likely to find themselves in such conditions only infrequently, Hicks described Keynes’s theory as special rather than general, and relevant only to depression conditions. And this has remained the textbook interpretation of Keynes ever since. Its main implication is that in a liquidity trap monetary policy is impotent, whereas fiscal policy is powerful because additional government expenditure is quickly translated into higher output.

Achild acquires stuffed animals throughout their life, but the core team is usually in place by the time they’re five. Louise got Red Rabbit, a hard, heavy bunny made of maroon burlap, for her first Easter as a gift from Aunt Honey. Buffalo Jones, an enormous white bison with a collar of soft wispy fur, came back with her dad from a monetary policy conference in Oklahoma. Dumbo, a pale blue hard rubber piggy bank with a detachable head shaped like the star of the Disney movie, had been spotted at Goodwill and Louise claimed him as “mine” when she was three. Hedgie Hoggie, a plush hedgehog Christmas ornament, had been a special present from the checkout girl after Louise fell in love with him in the supermarket checkout line and would strike up a conversation with him every time they visited. But Pupkin was their leader.

Despite the Bank of England gaining independence for setting UK monetary policy in 1998 and in the process being freed from political meddling; it has recently come under renewed attack from the lunatic fringe within the UK's Conservative Party, especially amongst arch Brexiteers such as Jacob Rees-Mogg (a.k.a. JackOff Grease-Smug to his growing number of detractors) who appear hell-bent on undermining the current bank governor's every move. When Mark Carney rightly sounds the alarm bells of the potential dangers to the UK economy resulting from a 'no deal' Brexit, he should be allowed to offer those wise words of warning without being subjected to Rees-Mogg's tiresome whining and monotonous droning on about politically motivated statements. It's high time this pestilent gnat modified his tune before a large fly swat of public outrage takes him down.

With the growth of market individualism comes a corollary desire to look for collective, democratic responses when major dislocations of financial collapse, unemployment, heightened inequality, runaway inflation, and the like occur. The more such dislocations occur, the more powerful and internalized, Hayek insists, neoliberal ideology must become; it must become embedded in the media, in economic talking heads, in law and the jurisprudence of the courts, in government policy, and in the souls of participants. Neoliberal ideology must become a machine or engine that infuses economic life as well as a camera that provides a snapshot of it. That means, in turn, that the impersonal processes of regulation work best if courts, churches, schools, the media, music, localities, electoral politics, legislatures, monetary authorities, and corporate organizations internalize and publicize these norms.

The euro and the ECB were designed in a way that blocks government money creation for any purpose other than to support the banks and bondholders. Their monetary and fiscal straitjacket obliges the eurozone economies to rely on bank creation of credit and debt. The financial sector takes over the role of economic planner, putting its technicians in charge of monetary and fiscal policy without democratic voice or referendums over debt and tax policies.

A third group of inflationists do not deny that inflation involves serious disadvantages. Nevertheless, they think that there are higher and more important aims of economic policy than a sound monetary system. They hold that although inflation may be a great evil, yet it is not the greatest evil, and that the State might under certain circumstances find itself in a position where it would do well to oppose greater evils with the lesser evil of inflation.

Harry Markowitz won a Nobel Prize for the insight that diversification is the only free lunch in the investment business. However, if all investments are in tech, much of the benefit of diversification is lost since tech valuations are correlated. For early-stage companies, profits are in the distant future, and therefore valuations are sensitive to interest rates. Shifting sentiment plays a role, and frequently both market psychology and monetary policy are factors, creating boom/bust cycles such as the internet bubble of 1999–2000 and the more recent recalibration of tech in 2022. There is a frequently overlooked temporal dimension to diversification. Other things being equal, a fund that invests $100 million a year over ten years is less risky than a fund that invests $500 million a year over two years. The former fund will likely invest across market cycles, which should lead to a lower volatility of outcomes, even if both funds make an identical number of investments with a similar risk profile.

In the immediate postbubble period, the wealth effect of asset price movements has a bigger impact on economic growth rates than monetary policy does. People tend to underestimate the size of this effect. In the early stages of a bubble bursting, when stock prices fall and earnings have not yet declined, people mistakenly judge the decline to be a buying opportunity and find stocks cheap in relation to both past earnings and expected earnings, failing to account for the amount of decline in earnings that is likely to result from what’s to come. But the reversal is self-reinforcing. As wealth falls first and incomes fall later, creditworthiness worsens, which constricts lending activity, which hurts spending and lowers investment rates while also making it less appealing to borrow to buy financial assets. This in turn worsens the fundamentals of the asset (e.g., the weaker economic activity leads corporate earnings to chronically disappoint), leading people to sell and driving down prices further. This has an accelerating downward impact on asset prices, income, and wealth.

Hamilton wanted his central bank to be profitable enough to attract private investors while serving the public interest. He knew the composition of its board would be an inflammatory issue. Directors would consist of a “small and select class of men.” To prevent an abuse of trust, Hamilton suggested mandatory rotation. “The necessary secrecy” of directors’ transactions will give “unlimited scope to imagination to infer that something is or may be wrong. And this inevitable mystery is a solid reason for inserting in the constitution of a Bank the necessity of a change of men.”17 But who would direct this mysterious bastion of money? Its ten million dollars in capital would be several times larger than the combined capital of all existing banks, eclipsing anything ever seen in America. Hamilton, wanting the bank to remain predominantly in private hands, advanced a theory that became a truism of central banking—that monetary policy was so liable to abuse that it needed some insulation from interfering politicians: “To attach full confidence to an institution of this nature, it appears to be an essential ingredient in its structure that it shall be under a private not a public direction, under the guidance of individual interest, not of public policy.”18

It has been proposed that monetary liabilities should be settled in terms of gold and not according to their nominal amount. If this proposal were adopted, for each mark that had been borrowed that sum would have to be repaid that could at the time of repayment buy the same weight of gold as one mark could at the time when the debt contract was entered into. The fact that such proposals are now put forward and meet with approval shows that etatism has already lost its hold on the monetary system and that inflationary policies are inevitably approaching their end. Even only a few years ago, such a proposal would either have been ridiculed or else branded as high treason.

THE economic consequences of fluctuations in the objective exchange-value of money have such important bearings on the life of the community and of the individual that as soon as the State had abandoned the attempt to exploit for fiscal ends its authority in monetary matters, and as soon as the large-scale development of the modern economic community had enabled the State to exert a decisive influence on the kind of money chosen by the market, it was an obvious step to think of attaining certain socio-political aims by influencing these consequences in a systematic manner. Modern currency policy is something essentially new; it differs fundamentally from earlier State activity in the monetary sphere.

Neoliberalism doesn’t want to do away with politics – neoliberalism wants to put politics at the service of the market. Neoliberals don’t think that the economy should be left in peace, but rather they are for the economy being guided, supported and protected through the spreading of social norms that facilitate competition and rational behaviour. Neoliberal economic theory isn’t built on keeping the hands of politics off the market, it’s built on keeping the hands of politics busy with satisfying the needs of the market. It’s not true that neoliberalism doesn’t want to pursue monetary, fiscal, family or criminal policies. It is rather that monetary, fiscal, family and criminal policies should all be used to procure what the market needs.

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

What are the health effects of the choice between austerity and stimulus? Today there is a vast natural experiment being conducted on the body economic. It is similar to the policy experiments that occurred in the Great Depression, the post-communist crisis in eastern Europe, and the East Asian Financial Crisis. As in those prior trials, health statistics from the Great Recession reveal the deadly price of austerity—a price that can be calculated not just in the ticks to economic growth rates, but in the number of years of life lost and avoidable deaths. Had the austerity experiments been governed by the same rigorous standards as clinical trials, they would have been discontinued long ago by a board of medical ethics. The side effects of the austerity treatment have been severe and often deadly. The benefits of the treatment have failed to materialize. Instead of austerity, we should enact evidence-based policies to protect health during hard times. Social protection saves lives. If administered correctly, these programs don’t bust the budget, but—as we have shown throughout this book—they boost economic growth and improve public health. Austerity’s advocates have ignored evidence of the health and economic consequences of their recommendations. They ignore it even though—as with the International Monetary Fund—the evidence often comes from their own data. Austerity’s proponents, such as British Prime Minister David Cameron, continue to write prescriptions of austerity for the body economic, in spite of evidence that it has failed. Ultimately austerity has failed because it is unsupported by sound logic or data. It is an economic ideology. It stems from the belief that small government and free markets are always better than state intervention. It is a socially constructed myth—a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privatizing social welfare systems for personal gain. It does great harm—punishing the most vulnerable, rather than those who caused this recession.

Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered why, if both the Democrats and Republicans are against deficits, we have deficits? Have you ever wondered why if all politicians are against inflation and high taxes, we have inflation and high taxes? You and I don’t propose a federal budget. The president does. You and I don’t have Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does. One hundred senators, 435 congressmen, one president and nine Supreme Court justices — 545 human beings out of 235 million — are directly, legally, morally and individually responsible for the domestic problems that plague this country. I excused the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered by private central bank. I exclude all of the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislators’ responsibility to determine how he votes. Don’t you see the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party. What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits. The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes. Those 545 people and they alone are responsible. They and they alone should be held accountable by the people who are their bosses — provided they have the gumption to manage their own employees.

centuries-long debate over the nature of money can be reduced to two sides. One school sees money as merely a commodity, a preexisting thing, with its own inherent value. This group believes that societies chose certain commodities to become mutually recognized units of exchange in order to overcome the cumbersome business of barter. Exchanging sheep for bread was imprecise, so in our agrarian past traders agreed that a certain commodity, be it shells or rocks or gold, could be a stand-in for everything else. This “metallism” viewpoint, as it is known, encourages the notion that a currency should itself be, or at least be backed by, some tangible material. This orthodox view of currency is embraced by many gold bugs and hard-money advocates from the so-called Austrian school of economics, a group that has enjoyed a renaissance in the wake of the financial crisis with its critiques of expansionist central-bank policies and inflationary fiat currencies. They blame the asset bubble that led to the crisis on reckless monetary expansion by unfettered central banks. The other side of the argument belongs to the “chartalist” school, a group that looks past the thing of currency and focuses instead on the credit and trust relationships between the individual and society at large that currency embodies. This view, the one we subscribe to and which informs

Neoliberal economics, the logic of which is tending today to win out throughout the world thanks to international bodies like the World Bank or the International Monetary Fund and the governments to whom they, directly or indirectly, dictate their principles of ‘governance’,10 owes a certain number of its allegedly universal characteristics to the fact that it is immersed or embedded in a particular society, that is to say, rooted in a system of beliefs and values, an ethos and a moral view of the world, in short, an economic common sense, linked, as such, to the social and cognitive structures of a particular social order. It is from this particular economy that neoclassical economic theory borrows its fundamental assumptions, which it formalizes and rationalizes, thereby establishing them as the foundations of a universal model. That model rests on two postulates (which their advocates regard as proven propositions): the economy is a separate domain governed by natural and universal laws with which governments must not interfere by inappropriate intervention; the market is the optimum means for organizing production and trade efficiently and equitably in democratic societies. It is the universalization of a particular case, that of the United States of America, characterized fundamentally by the weakness of the state which, though already reduced to a bare minimum, has been further weakened by the ultra-liberal conservative revolution, giving rise as a consequence to various typical characteristics: a policy oriented towards withdrawal or abstention by the state in economic matters; the shifting into the private sector (or the contracting out) of ‘public services’ and the conversion of public goods such as health, housing, safety, education and culture – books, films, television and radio – into commercial goods and the users of those services into clients; a renunciation (linked to the reduction in the capacity to intervene in the economy) of the power to equalize opportunities and reduce inequality (which is tending to increase excessively) in the name of the old liberal ‘self-help’ tradition (a legacy of the Calvinist belief that God helps those who help themselves) and of the conservative glorification of individual responsibility (which leads, for example, to ascribing responsibility for unemployment or economic failure primarily to individuals, not to the social order, and encourages the delegation of functions of social assistance to lower levels of authority, such as the region or city); the withering away of the Hegelian–Durkheimian view of the state as a collective authority with a responsibility to act as the collective will and consciousness, and a duty to make decisions in keeping with the general interest and contribute to promoting greater solidarity. Moreover,

Many models are constructed to account for regularly observed phenomena. By design, their direct implications are consistent with reality. But others are built up from first principles, using the profession’s preferred building blocks. They may be mathematically elegant and match up well with the prevailing modeling conventions of the day. However, this does not make them necessarily more useful, especially when their conclusions have a tenuous relationship with reality. Macroeconomists have been particularly prone to this problem. In recent decades they have put considerable effort into developing macro models that require sophisticated mathematical tools, populated by fully rational, infinitely lived individuals solving complicated dynamic optimization problems under uncertainty. These are models that are “microfounded,” in the profession’s parlance: The macro-level implications are derived from the behavior of individuals, rather than simply postulated. This is a good thing, in principle. For example, aggregate saving behavior derives from the optimization problem in which a representative consumer maximizes his consumption while adhering to a lifetime (intertemporal) budget constraint.† Keynesian models, by contrast, take a shortcut, assuming a fixed relationship between saving and national income. However, these models shed limited light on the classical questions of macroeconomics: Why are there economic booms and recessions? What generates unemployment? What roles can fiscal and monetary policy play in stabilizing the economy? In trying to render their models tractable, economists neglected many important aspects of the real world. In particular, they assumed away imperfections and frictions in markets for labor, capital, and goods. The ups and downs of the economy were ascribed to exogenous and vague “shocks” to technology and consumer preferences. The unemployed weren’t looking for jobs they couldn’t find; they represented a worker’s optimal trade-off between leisure and labor. Perhaps unsurprisingly, these models were poor forecasters of major macroeconomic variables such as inflation and growth.8 As long as the economy hummed along at a steady clip and unemployment was low, these shortcomings were not particularly evident. But their failures become more apparent and costly in the aftermath of the financial crisis of 2008–9. These newfangled models simply could not explain the magnitude and duration of the recession that followed. They needed, at the very least, to incorporate more realism about financial-market imperfections. Traditional Keynesian models, despite their lack of microfoundations, could explain how economies can get stuck with high unemployment and seemed more relevant than ever. Yet the advocates of the new models were reluctant to give up on them—not because these models did a better job of tracking reality, but because they were what models were supposed to look like. Their modeling strategy trumped the realism of conclusions. Economists’ attachment to particular modeling conventions—rational, forward-looking individuals, well-functioning markets, and so on—often leads them to overlook obvious conflicts with the world around them.

The overall U.S. homeownership rate increased from 64 percent in 1994 to a peak in 2004 with an all-time high of 69.2 percent. Real estate had become the leading business in America, more and more speculators invested money in the business. During 2006, 22 percent of homes purchased (1.65 million units) were for investment purposes, with an additional 14 percent (1.07 million units) purchased as vacation homes. These figures led Americans to believe that their economy was indeed booming. And when an economy is booming nobody is really interested in foreign affairs, certainly not in a million dead Iraqis. But then the grave reality dawned on the many struggling, working class Americans and immigrants, who were failing to pay back money they didn't have in the first place. Due to the rise in oil prices and the rise of interest rates, millions of disadvantaged Americans fell behind. By the time they drove back to their newly purchased suburban dream houses, there was not enough money in the kitty to pay the mortgage or elementary needs. Consequently, within a very short time, millions of houses were repossessed. Clearly, there was no one around who could afford to buy those newly repossessed houses. Consequently, the poor people of America became poorer than ever. Just as Wolfowitz's toppled Saddam, who dragged the American Empire down with him, the poor Americans, that were set to facilitate Wolfowitz's war, pulled down American capitalism as well as the American monetary and banking system. Greenspan's policy led an entire class to ruin, leaving America's financial system with a hole that now stands at a trillion dollars.

Financial Times commentator Martin Wolf concluded in 2010: "We already know that the earthquake of the past few years has damaged Western economies, while leaving those of emerging countries, particularly Asia, standing. It has also destroyed Western prestige. The West has dominated the world economically and intellectually for at least two centuries. That epoch is now over. Hitherto, the rulers of emerging countries disliked the West's pretensions, but respected its competence. This is true no longer. Never again will the West have the sole word." I was reminded of the Asian financial crisis in 1997. When Asian economies were devastated by similarly foolish borrowing the West – including the International Monetary Fund and World Bank – prescribed bitter medicine. They extolled traditional free market principles: Asia should raise interest rates to support sagging currencies, while state spending, debt, subsidies should be cut drastically. Banks and companies in trouble should be left to fail, there should be no bail-outs. South Korea, Thailand, Indonesia were pressured into swallowing the bitter medicine. President Suharto paid the ultimate price: he was forced to resign. Anger against the IMF was widespread. I was in Los Angeles for a seminar organised by the Claremont McKenna College to discuss, among other things, the Asian crisis. The Thai speaker resorted to profanity: F-- the IMF, he screamed. The Asian press was blamed by some Western academics. If we had the kind of press freedoms the West enjoyed, we could have flagged the danger before the crisis hit. Western credibility was torn to shreds when the financial tsunami struck Wall Street. Shamelessly abandoning the policy prescriptions they imposed on Asia, they decided their banks and companies like General Motors were too big to fail. How many Asian countries could have been spared severe pain if they had ignored the IMF? How vain was their criticism of the Asian press, for the almost unfettered press freedoms the West enjoyed had failed to prevent catastrophe.

...the centrality of competitiveness as the key to growth is a recurrent EU motif. Two decades of EC directives on increasing competition in every area, from telecommunications to power generation to collateralizing wholesale funding markets for banks, all bear the same ordoliberal imprint. Similarly, the consistent focus on the periphery states’ loss of competitiveness and the need for deep wage and cost reductions therein, while the role of surplus countries in generating the crisis is utterly ignored, speaks to a deeply ordoliberal understanding of economic management. Savers, after all, cannot be sinners. Similarly, the most recent German innovation of a constitutional debt brake (Schuldenbremse) for all EU countries regardless of their business cycles or structural positions, coupled with a new rules-based fiscal treaty as the solution to the crisis, is simply an ever-tighter ordo by another name. If states have broken the rules, the only possible policy is a diet of strict austerity to bring them back into conformity with the rules, plus automatic sanctions for those who cannot stay within the rules. There are no fallacies of composition, only good and bad policies. And since states, from an ordoliberal viewpoint, cannot be relied upon to provide the necessary austerity because they are prone to capture, we must have rules and an independent monetary authority to ensure that states conform to the ordo imperative; hence, the ECB. Then, and only then, will growth return. In the case of Greece and Italy in 2011, if that meant deposing a few democratically elected governments, then so be it. The most remarkable thing about this ordoliberalization of Europe is how it replicates the same error often attributed to the Anglo-American economies: the insistence that all developing states follow their liberal instruction sheets to get rich, the so-called Washington Consensus approach to development that we shall discuss shortly. The basic objection made by late-developing states, such as the countries of East Asia, to the Washington Consensus/Anglo-American idea “liberalize and then growth follows” was twofold. First, this understanding mistakes the outcomes of growth, stable public finances, low inflation, cost competitiveness, and so on, for the causes of growth. Second, the liberal path to growth only makes sense if you are an early developer, since you have no competitors—pace the United Kingdom in the eighteenth century and the United States in the nineteenth century. Yet in the contemporary world, development is almost always state led.

The question is whether the ECB will be able to fight low inflation by itself. Mr Draghi signalled that the central bank could only do so much when he called last week for governments in the eurozone to do more to boost growth by loosening fiscal policy and introducing structural reforms. Wolfgang Schäuble, Germany’s finance minister, told Bloomberg News this week that monetary policy had “come to the end” of its instruments, stating: “I don’t think that the ECB’s monetary policy has the instruments to fight deflation.

In January 1971 he startled the newsman Howard K. Smith by telling him, "I am now a Keynesian in economics," and in August he jolted the nation by announcing a New Economic Policy. This entailed fighting inflation by imposing a ninety-day freeze on wages and prices. Nixon also sought to lower the cost of American exports by ending the convertibility of dollars into gold, thereby allowing the dollar to float in world markets. This action transformed with dramatic suddenness an international monetary system of fixed exchange rates that had been established, with the dollar as the reserve currency, in 1946.

Every time the politicians we elect attempt to increase our standard of living or employment prospects by increasing government spending to stimulate economic activity (‘Keynesian economics’ as it is called); and every time a national bank tries to increase our standard of living or employment prospects by stimulating economic activity by increasing the money supply (‘quantitative easing’ as it is called), each of those actions has its ideological origins in the ideas contained in John Law’s Money and Trade Considered, and the actions of John Law’s Mississippi Scheme.

The gold standard created what economists have called a “golden straitjacket.” Debtor nations would exchange control over their monetary policy for capital mobility and stable exchange rates. Although the cost of borrowing abroad would fall, the United States would lose the ability to drive domestic interest rates below international interest rates. Gold dollars would flee abroad if interest rates elsewhere were higher.

The notion that elections cannot be allowed to change economic policy, indeed any policy, is a gift to [founder and leader of Singapore] Lee Kuan Yew supporters or indeed the Chinese communist party, who also believe this to be true. There is of course a long tradition of doubting the efficacy of the democratic process. But I would like to think that his tradition has been expelled long ago from the heart of Europe. It now seems that the euro crisis has brought it back. I urge you all to band together in a collective bid to resist it. Democracy is not a luxury to be afforded to the creditors and denied to the debtors. Indeed, it is the lack of democratic process in the heart of our monetary union that is perpetuating the euro crisis. Then again, I might be wrong. Colleagues, if you think that I am wrong, if you agree with Wolfgang, then I invite you to say so explicitly by proposing that elections should be suspended in countries like Greece until the country's programme is completed. What is the point of spending money on elections and asking our people to get all fired up to elect governments that will have no capacity to change anything?

These policies would come back to haunt Europe in the aftermath of the 2008 collapse. Instead of the vigorous, countercyclical fiscal, monetary, and debt relief policies called for in the wake of a 1929-scale crash, Europe’s institutions promoted austerity reminiscent of the post–World War I era. The debt and deficit limits of Maastricht precluded strong fiscal stimulus, and the government of Angela Merkel resisted emergency waivers. Germany, an export champion, which in effect had an artificially cheap currency in the euro, profited from other nations’ misery. Germany could prosper by running a large export surplus (equal to almost 10 percent of its GDP), but not all nations can have surpluses. The European Central Bank, which reported to nineteen different national masters that used the euro, had neither the tools nor the mandate available to the US Federal Reserve. The ECB did cut interest rates, but it did not engage in the scale of credit creation pursued by the Fed. The Germans successfully resisted any Europeanizing of the sovereign debt of the EU’s weaker nations, pressing them instead to regain the confidence of capital markets by deflating. Sovereign debt financing by the ECB went mainly to repay private and state creditors, not to rekindle growth. Thus did “fortress Europe,” which advocates and detractors circa 1981 both saw as a kind of social democratic alternative to the liberal capitalism of the Anglo-Saxon nations, replicate the worst aspects of a global system captive to the demands of speculative private capital. The Maastricht constitution not only internalized those norms, but enforced them. The dream of managed capitalism on one continent became a laissez-faire nightmare—not laissez-faire in the sense of no rules, but rather rules structured to serve corporations and banks at the expense of workers and citizens. The fortress became a brig. There was plenty to criticize in the US response to the 2008 collapse—too small a stimulus, too much focus on deficit reduction, too little attention to labor policy, too feeble a financial restructuring—but by 2016, US unemployment had come back down to less than 5 percent. In Europe, it remained stuck at more than 10 percent, with all of the social dynamite produced by persistent joblessness.

we do not know the physics of climate system responses to warming well enough to blame most of the warming on human activities. Human causation is simply assumed. The models are designed with the assumption that the climate system was in natural balance before the Industrial Revolution, despite historical evidence to the contrary. They only produce human-caused climate change because that is the way they are designed. This is in spite of abundant evidence of past warm episodes, such as 1,000- to 2,000-year-old tree stumps being uncovered by receding glaciers; temperature proxy evidence for the Roman and Medieval Warm Periods covering that same time frame; and Arctic sea ice proxy evidence for a natural decrease in sea ice starting well before humans could be blamed. Natural warming since the Little Ice Age of a few hundred years ago is simply ignored in the design of climate models, since we do not know what caused it. Simply put, the computerized climate models support human causation of climate change because that’s what they assume from the outset. They are an example of circular reasoning. There is little to no evidence of long-term increases in heat waves, droughts, or floods. Wildfire activity has, if anything, decreased, even though poor land management practices are now making some areas more vulnerable to wildfires even without climate change. Contrary to popular perception and new reports, there is little to no evidence of increased storminess resulting from climate change. This includes tornadoes and hurricanes. Long-term increases in monetary storm damages have indeed occurred, but are due to increasing development, not worsening weather. Sea level has been rising naturally since at least the mid-1800s, well before humans could be blamed. Land subsidence in some areas (e.g. Norfolk, Miami, Galveston-Houston, New Orleans) would result in increasing flooding problems even without any sea-level rise, let alone human-induced sea-level rise causing thermal expansion of the oceans. Some evidence for recent acceleration of sea-level rise might support human causation, but the magnitude of the human component since 1950 has been only 1 inch every 30 years. Ocean acidification is now looking like a non-problem, as the evidence builds that sea life prefers somewhat more CO2, just as vegetation on land does. Given that CO2 is necessary for life on Earth, yet had been at dangerously low levels for thousands of years, the scientific community needs to stop accepting the premise that more CO2 in the atmosphere is necessarily a bad thing. Global greening has been observed by satellites over the last few decades, which is during the period of most rapid rises in atmospheric CO2. The benefits of increasing CO2 to agriculture have been calculated to be in the trillions of dollars. Crop yields continue to break records around the world, due to a combination of human ingenuity and the direct effects of CO2 on plant growth and water use efficiency. Much of this evidence is not known by our citizens, who are largely misinformed by a news media that favors alarmist stories. The scientific community is, in general, biased toward alarmism in order to maintain careers and support desired governmental energy policies. Only when the public becomes informed based upon evidence from both sides of the debate can we expect to make rational policy decisions. I hope my brief treatment of these subjects provides a step in that direction. THE END

Platform businesses at this scale control economic systems that are bigger than all but the biggest national economies. No wonder Brad Burnham, one of the lead investors at Union Square Ventures, responded to the introduction of Facebook Credits—a short-lived system of virtual currency for use in playing online games—by wondering what the move said about Facebook’s monetary policy.

Even more interesting, SAP has used the social currency supply to stimulate its developer economy in the same way as the Federal Reserve uses the money supply to stimulate the U.S. economy. When SAP introduced a new customer relationship management (CRM) product, it offered double points on any answer, code, or white paper relating to CRM. During the two-month duration of this “monetary expansion” policy, developers found gaps in the software and devised new features at a vastly higher rate.43 Used as a money supply, the increased flow of social currency caused overall economic output to rise. In effect, SAP employed an expansionary monetary policy to stimulate growth—and it worked.

When my information changes, I alter my conclusions. What do you do, sir? —Keynes, in response to a criticism during the Great Depression of having changed his position on monetary policy

When Trichet, at a meeting of top international monetary officials, defended the franc fort policy against North American critics by telling them that they did not understand ‘Europe’, one of his antagonists declared of himself that he might not understand ‘Europe’ but he did understand economics. Trichet did not deign to make any rejoinder.

While Krugman thus ignored the role of the Fed’s inflationary monetary policy, Ron Paul had explained that when interest rates are high, it encourages savings, but when the Fed artificially lowers interest rates, the incentive is to borrow and to spend, rather than to save dollars that would have less purchasing power tomorrow than today.

But who would direct this mysterious bastion of money? Its ten million dollars in capital would be several times larger than the combined capital of all existing banks, eclipsing anything ever seen in America. Hamilton, wanting the bank to remain predominantly in private hands, advanced a theory that became a truism of central banking—that monetary policy was so liable to abuse that it needed some insulation from interfering politicians: “To attach full confidence to an institution of this nature, it appears to be an essential ingredient in its structure that it shall be under a private not a public direction, under the guidance of individual interest, not of public policy.

The father of the scientific method, Francis Bacon, said it this way, “A little philosophy inclineth men’s minds to atheism, but depth in philosophy bringeth men’s minds about to religion.”11

The underpinning of their interest is the macro backdrop. The financial crisis is likely to be shorter-lived than the financial markets expect, they believe, because the Federal Reserve is poised to unleash powerful weapons of monetary policy on an unprecedented scale—in coordination with its counterparts overseas. The credit crunch will be overwhelmed by a sea of liquidity. This gift of almost a trillion dollars of freshly printed cash from the Fed alone will lift stock and debt markets to the point that investors will forget the jagged falls and crashes that have been torturing them in recent months. To be blunt, things will not stay cheap for long. It is an excellent time to buy a good business.

throughout my life, the dollar has been the world's reserve currency, monetary policy has been an effective tool for stimulating economies, and democracy and capitalism have been widely regarded as the superior political and economic system. Anyone who studies history can see that no system of government, no economic system, no currency, and no empire lasts forever, yet almost everyone in surprised and ruined when they fail.

The Chinese people and the American people are not each other’s enemies. Rather, the main conflict in both countries is that between the elites and their wider populations. This has been driven by fiscal, industrial and monetary policies that have pushed widening wealth and income inequalities within both countries and led to significant imbalances in the commercial and financial relationship between them.

Baker delivered a message: “The president is ordering you not to raise interest rates before the election.” I was stunned. Not only was the president clearly overstepping his authority by giving an order to the Fed, but also it was disconcerting because I wasn’t planning tighter monetary policy at the time.

Money won't replace you, but when you have life insurance, your dreams for your family can still be continued by the monetary benefits of your insurance policies.

He had no doubt that fluctuations in business activity could be prevented by appropriate monetary policy.

In The General Theory, money still retains its power to disturb the real economy. But its disturbing power arises from its function as a store of value rather than as a means of exchange. This had the further consequence of calling into question the reliability of monetary policy as an instrument of economic management.

A Tract on Monetary Reform identified Keynes as the foremost intellectual opponent of the ‘official’ policy of returning sterling to the gold standard at the pre-war parity with the dollar. But his plea for a ‘managed’ currency found little favour. Winston Churchill, the chancellor of the exchequer, put sterling back on the gold standard at $4.86 on 20 April 1925. Keynes immediately attacked the decision in a memorable pamphlet, The Economic Consequences of Mr. Churchill.

He predicted that actual monetary policy would shrink from the attempt to restore equilibrium by this method. Interest rates would be kept high enough to attract foreign funds to London; but not pushed so high as to break trade-union resistance to a reduction in the money-wage per worker employed. The result would be a low-employment economy. So it proved. Despite the defeat of the General Strike in 1926, employers made little effort to reduce money-wages, which remained steady for the rest of the 1920s although the price level sagged. Keynes was the first to realize and state clearly that an overvalued currency would be a weak, not a strong, currency.

Given the differences in pandemic-related job losses across the globe, the second lesson of the pandemic was that unemployment is a policy choice.

Taxation policy has to be framed with the end goal in mind, which is to release real resources the public sector wishes to buy in the current period.

A once-and-for-all increase in prices due to low-end workers finally seeing their wages catch up to historical productivity increases is a desired policy outcome, not something to be avoided. Thereafter, the goal would be for wages to stay roughly par with productivity, thereby creating price stability.

How do you draw the line between a healthy, exciting economic boom and a wanton, speculative stock-market bubble driven by the less savory aspects of human nature? As I pointed out drily to the House Banking Committee, the question was all the more complicated because the two can coexist.

Taxes reduce the demand for physical resources from the non-government sectors. Resources which then become available for purchase by the government in pursuit of the socio-economic programme it was elected to provide.

For those with an open mind, it has become increasingly clear that MMT provides a sound basis for developing an understanding of the operation of a monetary economy, enabling economists and political analysts to better understand the nature of the opportunities that are available for policy.

The multilateral institutions that were introduced in the Post World War II period to coordinate international aid – the IMF and the World Bank – have failed in their respective missions. They became agents for the ‘free market’ ideology and through their structural adjustment packages and related policies have made it harder for a nation to develop.

inflation is a zero-sum game: there are always winners and losers, not just losers. The idea that it is only the latter has been encouraged by neoliberal scholars in order to justify policies that lead to economic contraction every time upward pressure is placed on wages by low unemployment rates.

What did not happen in Florida, in either the Second or Third Seminole War, was the provision of enough forces and transportation to affect the object of these wars, the final removal of all Native Americans from the peninsula. Prior to the war’s end, rewards were offered by the United States government for the capture of Seminoles. This policy failed to bring in any significant number of Native Americans; however, by early 1858, the war was winding down. White flags and other signs were hung out on known paths used by the Seminoles, and military operations were ordered stopped by Colonel Loomis. Elias Rector, the superintendent for Indian Affairs in the southern superintendency, came to Florida in January 1858 to assist in the negotiations for peace. After a conference was held 35 miles from Fort Myers with Assinwah’s band and others, the terms were offered and monetary inducements guaranteed. On May 4, 1858, Billy Bowlegs and most of his band boarded the Grey Cloud and sailed to Egmont Key, at the mouth of Tampa Bay. Here this group was joined by 41 prisoners and made ready for the trip west. By May 8, the war was declared officially over. The army believed that there were only about 100 Seminoles and Miccosukees left in Florida. This number included the aged leader Sam Jones. There is a debate on just when this ancient and respected leader died; however, it is known that he was gone before the end of Civil War. Where his remains were deposited is a secret to this day. It is from this small number of Seminoles and Miccosukees that today’s recognized tribes have descended as a continuing tribute to the tenacity of their ancestors’ will to survive. As historian Patsy West has aptly called them, they are “The Enduring Seminoles.” BIBLIOGRAPHY DOCUMENTS A number of collections of documents exist from which the above was drawn, including the Letters Received by the Secretary of War, Registered Series, 1801–1860; Letters Sent by the Secretary of War Relating to Military Affairs, 1800–1889; Letters Received by the Office of the Adjutant General (Main Series) 1822–1860; and Letters Sent, Registers of Letters Received, and Letters Received by Headquarters, Troops in Florida, and Headquarters Department of Florida, 1850–1858. The collections are all on microfilm from the National Archives. Numerous Congressional documents were also consulted

because there is a lag between changes in monetary policy and their effect on the economy.

Tight fiscal policies were arguably offsetting much of the effect of our monetary efforts.

The better way to look at the distributional effect of monetary policy is to compare changes in the income flowing from capital investments with the income from labor.

As it turns out, easier monetary policy tends to affect capital and labor incomes fairly similarly.

European countries might suspect that he would take the side of the debtor countries in making monetary policy or in fiscal disputes.

Formulating effective monetary policy requires timely information.

the economy performs best if the central bank has the latitude to make monetary policy decisions in pursuit of maximum employment and stable prices,

(Politicians will have to do the heavy lifting here, because for the most part these are not issues that can be addressed by the Fed or monetary policy.)

I don’t mean to imply that no one is minding the store to stop bubbles from getting too big. On the contrary, many smart people are trying to do just that. It’s an immense challenge. The problem is not inattention, ill intention, or negligence. It’s the fact that every decision in the macroeconomic sphere has gigantic stakes attached. The wrong call can cause a lot of damage. To mitigate damage, a welter of rules and regulations has emerged since the global financial crisis. The traditional focus on maintaining sound individual financial institutions has turned by necessity to a larger realm. “Keeping individual financial institutions sound is not enough,” the International Monetary Fund has warned. “Policy makers need a broader approach to safeguard the financial system as a whole. They can use macro-prudential policy to achieve this goal.” That’s a fancy way to say, let’s think about the aggregate picture, not just the moving parts.

Norman now surprised everyone by arguing for a sharp rise in U.S. rates, possibly by 1 percent, even by 2 percent, taking the discount rate to 7 percent. The Fed should try to break "the spirit of speculation," "prostrating" the market by a forceful tightening of credit. Once a change in psychology had been achieved, interest rate could be then brought down again and capital flows to Europe would resume. For some reason Norman thought the Fed could pierce the bubble with a surgical incision that would bring it back to earth, without harming the economy. It was a completely absurd idea. Monetary policy does not work like a scalpel but more like a sledgehammer. Norman could neither be sure how high rates would have to go to check the market boom nor predict with any certainty what this would do to the U.S. economy.

Others argue that he was operating with what might be called a faulty speedometer for gauging monetary policy. The usual indicators that he relied upon suggested that conditions were very easy - short-term rates were truly low and banks flush with excess cash. The problem was that some of these measures were now giving off the wrong signals. For example, when banks overflowed with surplus cash, this was generally an index, in a more stable and settled economic environment, the Fed had pushed more than enough reserves into the system to restart it. In 1930, however, in the wake of the crash, banks had begun carrying larger cash balances as a precaution against further disasters, and excess bank reserves were more a symptom of how gun-shy banks had become and less how easy the Fed had been.