Op-Ed: Federal Reserve Grabs New Powers

While inflation hawks understandably keep a close watch on the Federal Reserve’s money-creation activities, an equally worrisome Fed activity is taking place right under their noses. Under cover of addressing the financial crisis and recession, the Fed has become the central allocator of credit.

As San Jose State University economics professor Jeffrey Rogers Hummel points out in The Independent Review (Spring 2011), Fed chairman Ben Bernanke “has so expanded the Fed’s discretionary actions beyond merely controlling the money stock that it has become a gigantic, financial central planner.... [T]he Fed that emerged from the crisis is no longer the same as the Fed before the crisis.”

Read the full op-ed, "Federal Reserve Grabs New Powers."

TGIF: The New Fed

“Things are seldom what they seem.” –W.S. Gilbert, “H.M.S. Pinafore”

Nowhere is this more true than in government – which means we have to watch it closely. Unfortunately preconceived notions can make us impervious to events right in front of us and lead us to colossal misperceptions.

Take the Federal Reserve System. (All together now: Please!) Since the central bank controls the money supply, advocates of free markets and market-based money are understandably wary of its power to generate inflation. It’s inflated in the past and has the capacity to do so in the future. So attention naturally goes in that direction.

The problem is that while we’re watching for inflation, we might be missing the Fed’s real mischief elsewhere.

Read the rest of TGIF: The New Fed here.

TGIF: "F" as in Fed

The Federal Reserve, America’s fatally conceited monetary central planner, is not terribly popular these days – which is cause for hope – and now we have a report card on the entire Fed era that strongly supports the view that we’d be better off without it. At the very least, as the authors suggest, the burden of proof is squarely on the shoulders of those who would retain the Fed.

The report card comes in the form of a working paper from the Cato Institute: “Has the Fed Been a Failure?” by George A. Selgin, William D. Lastrapes, and Lawrence H. White.

The rest of TGIF is here.