Denationalization of Money

«10 Good Reasons for the Denationalization of Money»

Speech by Guido Hülsmann (in German)

German economist and professor at the School of Law, Economics, and Management, University of Angers

The current sovereign debt crisis within the eurozone highlights some of the fundamental problems of our economic order. It must be emphasised from the outset that – contrary to widespread opinion – we in Western Europe and North America are by no means living under capitalism, at least not if this term is intended to mean an economic order based on the inviolability of private property. Rather, we live in a strongly interventionist system, and our crisis is a crisis of statism that has got completely out of hand.

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«Why Do We Need Central Banks?»

Speech by Gerald O’Driscoll

Senior fellow at the American Institute for Economic Research

The question posed in the title of my paper will startle many. Central banks are institutions largely taken for granted even by monetary economists. In the 1930s, Vera Smith, a graduate student writing a Ph.D dissertation under Professor Hayek, examined the question. She concluded that “the superiority of central banking over the alternative became a dogma which never again came up for discussion was accepted without question or comment in all the later foundations of central banks” (Smith 1990: 167-68).

In my talk, I will re-examine the dogma in light of theory and history. A re-examination is timely for two principal reasons. First, the Federal Reserve and the European Central Bank have taken on extraordinary new responsibilities. Monetary policy is being transformed into fiscal policy in the form of credit allocation to key sectors and even countries. The Federal Reserve has been accused of industrial planning (Hummel 2011).

Second, controversies have emerged over the historical record and the independence of the Federal Reserve and other important central banks. Reviewing the historical literature, Selgin et al. (2012) find that the Fed’s performance in terms of standard measures is not what its supporters have claimed. This is true both in absolute terms (e.g., with respect to price stability) and in comparison to the pre-Fed era (post U.S. Civil War up to the eve of World War One). It is far from clear that the U.S. central bank has brought greater macroeconomic stability to the U.S. economy.

Cargill (2012) and others have questioned the economic literature on central bank independence. That literature suggests that more independent central banks do better in promoting price stability than do less independent central banks. Cargill argues that the literature misstates the nature of independence; misidentifies which central banks are independent; and does not correctly measure independence. A session at the January 2013 meetings of the American Economic Association will examine these and other questions relating to central bank independence. Taken together, these recent studies and others greatly undermine the received wisdom regarding central banks. My talk builds on the new literature on central banking.

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Speech