Milton Friedman: ...I've always felt that the big defect politically of the Federal Reserve is precisely that so much depends on unelected representatives. The central bank is treated as if it were the Supreme Court. That's why during the Depression, there was no effective controls on the central bank. There were members of Congress who knew what to do and who trying to get the Fed to do it but they had no way to do so.
[Ed: there were some members of Congress. Was it a majority?]
Russ Roberts: There was no incentive directly. There was an indirect incentive, of course, which was humiliation and the stigma which has endured. They had no idea at the time of how bad that would turn out—how those decisions would look in retrospect. But you're suggesting that the disadvantage of the current system is a lack of accountability.
Milton Friedman: Right.
Russ Roberts: But the alternative, the elected system, has the problem that you mentioned earlier of the temptation to exploit the ability to create money to increase revenue.
[Ed: to buy votes.]
Milton Friedman: But that's why what you want—if possible—is a mechanical system. If there was any virtue to the gold standard, it was that virtue. Maybe you could create the same thing now. My favorite proposal really is a little bit more sophisticated—or less sophisticated if you want to look at it that way—than a straight increase in the quantity of money. I would—if I had my choice—freeze the amount of high-powered money. Not increase it.
Russ Roberts: High-powered money being bills and cash.
Milton Friedman: High-powered money is the currency plus bank reserves.
Emphasis mine.
"If"? That's the deciding factor for me! I don't want money to be controlled by the next tyrant. That and the fact that gold is what The People chose, as opposed to the technocrats.
No comments:
Post a Comment