from Jesse’s Café Américain:
“We sometimes forget that central banking as we know it today is, in fact, largely an invention of the past hundred years or so, even though a few central banks can trace their ancestry back to the early nineteenth century or before. It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. If the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with `free banking.’ The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.”
Paul Volcker, foreword to The Central Banks, 1995
Price stability is not, of course, the only priority of a central bank, depending on how narrowly or broadly one wishes to define it. But I think that the record of the Federal Reserve over the past twenty to thirty years is abysmal enough to cast doubt on their competency and objectivity by almost any other range of metrics, considering the prolonged stagnant real wage, growing wealth inequality, massively fraudulent banking system, and serial asset bubbles interspersed with systemic crises.
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