The political economy of the federal reserve essay

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The political economy of the federal reserve essay

The Unknown Idealin Greenspan has never publicly retracted a word of this essay. This essay is a good introduction to the government's war on gold. It summarizes the basic issue: A gold coin standard places a restraint on the government's ability to defraud the public through monetary inflation.

The problem is, a government-guaranteed gold standard is guaranteed by the government. As I like to say, a government-guaranteed gold standard isn't worth the paper it's written on.

But, for as long as the government redeems its paper money or its credit money on demand — in gold coins of a fixed weight and fineness, at a fixed exchange rate with the government's money — the public does possess a lever of power against the government: Greenspan can speak in English when he wants to.

The political economy of the federal reserve essay

He is not confined to what James Grant has called central banker Esperanto. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society. Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization.

If men had no means to store value, i. What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily.

First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store.

Mar 04,  · This is done by the Federal Reserve’s Open Market Committee (FOMC), which is composed of the seven members of the Federal Reserve Board of Governors (the chair, the vice-chair, and five other governors), plus the president of the New York Fed and, on a rotating basis, the presidents of four of the other 11 regional Fed banks. Board of Governors of the Federal Reserve System. The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. "The Political Economy of Central Bank Independence (PDF)," Special Papers in International Finance, No. 19 (May). Aug 17,  · The intent of the Fed is to provide a stable currency. Monetary policy affects the money supply depending on changing economic growth (grow the money supply with a growing economy to prevent deflation, keep money supply growth in check to keep pace with the economic growth rate to avoid runaway inflation).

But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal.

A metal is generally chosen because it is homogeneous and divisible: Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable.

Wheat is a luxury in underfed civilizations, but not in a prosperous society.

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Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury.May 24,  · - The Federal Reserve Board uses a number of Sophisticated measures to influence the economy -Monetary Policy should be under the discretion of the Federal Reserve Board rather than congress -The Federal Reserve Board relies on one main strategy to address major economic issues.

In addition, high tariffs and war debts were political causes of the Great Depression. America had lent money to the United Kingdom and other European nations in World War I reparations.

This caused many other economies to become reliant on the U.S. economy. Yellen was an assistant professor at Harvard in –76, an economist with the Federal Reserve Board of Governors in –, and a lecturer at The London School of Economics and Political Science in .

Sep 01,  · Federal Government Growth Before the New Deal. Lincoln and Wilson Set Precedents for Government Spending Monday, September 01, the Federal Reserve in , and the Federal Trade Commission in A Case Study of Three American Constitutions,” Constitutional Political Economy, vol.


2, no. 2 (Fall ). Independent and Effective Student Essay Contest Winner.

Tweet Share Post Email Print. Student Essay Contest Question. Is the Federal Reserve Too Independent? We cannot further subject our economy to shifting political winds which constantly turn in different directions and toward different goals. The Fed's.

Feb 10,  · There is an old story, perhaps apocryphal, in which a newly appointed member of the Board of Governors of the U.S. Federal Reserve System was greeted by the Fed Chair with an apologetic explanation of the new governor’s status.

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