A better alternative, if only it can somehow be achieved, or at least approximated, is a monetary system that adjusts the stock of money in response to changes in the demand for money balances, thereby reducing the need for changes in the general level of prices.
What sort of monetary policy or regime best avoids the costs of having too much or too little money?
How can a central bank manage a quantity without being certain just how to define, let alone measure, that quantity? How is it possible for the quantity of money supplied to differ from the quantity demanded? When those things do differ, how can one tell? Finally, just what does “the demand for money” mean?
What, exactly, is “monetary policy” about? Why is there such a thing at all? What should we want to accomplish by it — and what should we not try to accomplish?
Free bankers have been fighting a war on two fronts. On one they face champions of central banking and managed money. On the other they struggle against advocates of 100-percent reserve banking. Although the second front is a lot smaller than the first, it’s far from being unimportant, in part because the battle there is being fought against people who generally favor free markets, who might have been expected to join rather than to oppose our cause.
The gold standard was hardly perfect, and gold bugs themselves sometimes make silly claims about their favorite former monetary standard. But these things don’t excuse the errors many economists commit in their eagerness to find fault with that “barbarous relic.”
It isn’t clear that the Fed has brought any substantial improvement in macroeconomic stability.
The Fed is a large and aloof agency that needs to be tamed.
The U.S. was able to recover relatively quickly from at least one deep slump despite authorities’ refusal to resort to either fiscal or monetary stimulus.
While I’m all for monetary freedom and competition, I’m also for reforming the U.S. dollar, which for me means freeing it from control by discretionary central bankers.
If even economists who’ve never heard of free banking, or who dismiss both it and the people who take it seriously, nevertheless subscribe to some free banking theories of their own, where do their theories come from?
History shows that, whenever financial institutions, whether domestic or global, have been allowed to develop freely, the results have been far more satisfactory than those from government-designed schemes.
William Jennings Bryan, the most stalwart enemy of both private currency and currency monopoly since Andrew Jackson, helped to create a currency monopoly far more powerful than any that Jackson could ever have envisaged, and far more capable of gratifying Wall Street, at the expense of the rest of the nation, than Wall Street alone, left perfectly free from government controls, could ever have devised.