"The Fed is making a big mistake by ignoring movements in the price of the dollar, movements in the price of gold, in favor of inflation-targeting, which is a bad idea. The Fed has always had the wrong view about the dollar exchange rate; they think the exchange rate doesn't matter. They don't say that publicly, but that is their view...(But currency volatility) just spoils the effect of any kind of free trade agreement." "
"What would be your winning formula today? What advice would you give to Washington that would help turn around our moribund economy?" (Mundell) pauses to think, but only for a moment. "Pro-growth tax policies, stable exchange rates...The most important initiative you could take to improve the world economy would be to stabilize the dollar-euro rate."
We all know that Evan aspires to be chairman of the Federal Reserve, or failing that, proconsul of a territory like Iraq. So here is a must read article for him. For those of us with a lower level of interest, note that Mundell, father of the Euro, sees fiat currency as a building block, made by gov't, by which others can trade more efficiently. He doesn't believe the Fed should think of itself as responsible for stimulating the economy, rather it provides the tools for others.
You can read the entire interview here:
ReplyDeletehttp://online.wsj.com/article/SB10001424052748704361504575552481963474898.html?KEYWORDS=judy+shelton#articleTabs%3Darticle
I'm working on a longer response regarding the Fed--but, just for the record, why would I want to be at the helm of the Federal Reserve? Dr. Tisdall, you know my views at this point: it's not government's job to make "decisions"--mistakes--for other people. Any place where gov't starts mandating a particular private action, they effectively take a mutual-benefit, positive-sum situation (like trade along the PPF) and reduce it to a zero-sum situation. By definition, this costs us, so there's a tradeoff to be considered here, for everything ranging from civil defense and rule of law to a "living wage" and universal healthcare--the costs of guaranteeing versus the costs of not guaranteeing. I don't think anyone is smart enough to decide something like the exchange rate or the interest rate or the trade balance. Top-down monetary policy seeks to balance the "Impossible Trinity" (see wikipedia), which is increasingly seeming like the quality-availability-cost question we were considering regarding healthcare and the free market, in that you're best off leaving it to the market to decide the correct balance.
ReplyDelete-Evan
GOLD STANDARD
ReplyDelete- From Jimmy's office in Austria