Key Monetary Writings

Washington, Wall Street and the “Monetary Sin of the West”

Washington, Wall Street and the “Monetary Sin of the West” By John D. Mueller Catholic Finance Association Panel, “Has the culture of Wall Street changed since the credit crisis of 2008?” New York, N.Y. 31 July 2013 I’m grateful to the Catholic Finance Association for hosting this panel asking, “Has the culture of Wall Street changed since the credit crisis of 2008?” I can agree in part with the other two panelists. In fact, I’d like to bottle what Carla Harris has to offer. It’s easy to see why she is such a widely sought inspirational speaker. I’m afraid that I can’t offer inspiration. …Read more

Troubled Currencies

For academics, the term "troubled currency" might be a term of art. But for people who are faced with such a currency, they know a troubled currency when they see one. Today, this is the case for millions of people around the world — most notably in Iran, North Korea, Argentina, Venezuela, Egypt and Syria. A troubled currency is one in which users have lost confidence. When users no longer think a currency will retain its purchasing power, they attempt to dump it for a stable foreign currency (or commodities). As the demand for the troubled currency evaporates, its value vis-á-vis stable …Read more

North Korea: From Hyperinflation to Dollarization?

Following North Korean supreme leader Kim Jong-il’s death in December 2011, many around the world had high hopes that his successor (and son), Kim Jong-un, would launch economic and political reforms. Unfortunately, in the year and a half since he assumed power, the new supreme leader has not delivered on his advertised economic reforms, and misery continues to grip all but those in North Korea’s communist ruling class. During the past few months, North Korea has been the subject of outsized news coverage. The recent peacocking by the Supreme Leader – from domestic martial law policies to …Read more

Hot Money, Cold Credit

Money matters – it’s a maxim of Prof. Milton Friedman that I repeat often in my columns. Since the Northern Rock bank run of 2007 – the “opening shot” of the financial crisis – the money supply, broadly measured, in the United States, Great Britain, and the Eurozone has taken a beating. Recently, in the United States, money supply growth has started to rebound, but only slightly. In the U.K. and the Eurozone, things are much worse. This is cause for concern, because the quantity of money and nominal gross domestic product are closely related. Not surprisingly, in the U.S., growth has been …Read more

The Technology Revolution and Monetary Evolution

When hearing or reading excited discussions of ``the new payment technologies'' and ``digital money'' it is well to maintain some historical perspective. What exactly is new, and what difference will it make? Is the coming change in the payments system revolutionary, or better understood as evolutionary? Will changes in the way money is paid from one party to another bring about changes in the character of money itself? Monetary Evolution, Not Revolution Digital money--spendable balances represented solely by digits on a bank's balance sheet--is not new. Banking historians have found that …Read more

Rethinking Conventional Wisdom: A Monetary Tour d'Horizon for 2013

The year 2012 has come and gone, and so have many things that were once accepted as conventional wisdom. Let’s take a tour d’horizon and examine three ideas that bear rethinking in 2013. Rethinking the Money Supply I begin with the nonsensical way that most central banks, including the U.S. Federal Reserve, measure the money supply. Conventional wisdom holds that the best way to measure the money supply is to define the components that make up a particular measure of money (from M0 to broad M4) and then simply add up the components to obtain a total. … Read more

Myth 13: A Gold Standard Needs to be International, and the Rest of the World Won’t Come Along

Selgin (2012) makes an important point when he notes that:
the historical gold standard that … performed so well was an international gold standard, and [its] advantages .. were to a large extent advantages due to belonging to a very large monetary network. Consequently, a gold standard that is limited to a single country, and even to a very large country, cannot be expected to offer the same advantages as a multi-country gold standard or set of gold standards.
I have already argued above that the strongest case for reinstating the gold standard is for an international gold standard.  …Read more

Myth 12: Inflation is So Low Today that we Don’t Need a Gold Standard

Ezra Klein (2012) comments:
In 1981, the country really was facing an inflation problem. It made sense that people would be looking for radical alternatives that would help control inflation.  Today, inflation is about as low as it’s ever been, and if you look at market expectations — you do believe in the market, don’t you? — it’s expected to stay low.
It is of course true that the urgency of adopting a gold standard to fight inflation is lower when the inflation rate is lower.  If inflation were our exclusive concern, and we could trust the central bank to keep inflation as low …Read more

Is the Gold Standard Still the Gold Standard Among Monetary Systems?

Critics have raised a number of theoretical and historical objections to the gold standard. Some have called the gold standard a "crazy" idea. The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration. In a study covering many decades in a large sample of countries, Federal Reserve Bank economists found that "money growth and inflation are higher" under fiat standards than under gold and silver …Read more

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In Memoriam
Professor Jacques Rueff

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