Cato's 37th Annual Monetary Conference: A Shadow Review of Fed Policy

James A. DornImproving the Monetary SystemSince 1983, the Cato Institute ’s Annual Monetary Conference has brought together leading scholars and policymakers to discuss important issues in the conduct of monetary policy and steps that might be taken to improve the existing system. The conferences have also considered ideas for more fundamental reform by examining alter natives to a discretionary government fiat money regime.[1]Karl Brunner, who participated in the first conference —The Search for Stable Money—in January 1983, was deeply concerned about the institutional uncertainty created by a lack of a transparent and enforceable monetary rule. In 1980, he advocated a strategy for monetary policy that he thought would reduce uncertainty and help promote economic stability:We suffer neither under total ignorance nor do we enjoy full knowledge. Our life moves in a grey zone of partial knowledge and partial ignorance. More particularly, the products emerging from our professional work reveal a wide range of diffuse uncertainty about the detailed response structure of the economy. . . . A nonactivist [rules-based] regime emerges under the circumstances . . . as the safest strategy. It does not assure us that economic fluctuations will be avoided. But it will assure us that monetary policymaking does not impose additional uncertainties . . . on the market place.[2]The Fed ’s ReviewNearly four decades later, and after a severe financial crisis in 2008 –09, the Federal R...
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