Monetary Theory

Those Americans who twice succeeded in doing away with a central bank were aware of the dangers; but they failed to see that the evils they fought

Thus, Mankiw's solution for dealing with unprecedented excess reserves is for the Fed to create even more reserves in order to pay bankers not to make new loans. Does that sound like a good long-term plan for the economy?

Mr. Calandro not only strives to teach a method to avoid the delusion, but to attempt to profit from the resultant cleaning out when the bubble bursts.

Money then, for Buridan, is a market commodity, and the value of that money, just as in the case of other market commodities, "must be measured by human need."

Dionysius's modern counterpart not only has ministers to advise him but also professors of economics to explain to the public how the abundance in their pantries is improved by inflation.

"Just as serious as the economic disruption are the social consequences of inflation."

We suggest that the threat of future crises will disappear once the Fed stops tampering with interest rates and the money supply. Furthermore we suggest that the act of money creation out of thin air is going to disappear once the present paper standard is replaced with a gold standard. If we allow a market-chosen money to fulfill the role of the medium of exchange, the issue of inflation will also disappear.

In the real world, erecting higher trade barriers will reduce economic output in both countries, whereas reducing trade barriers will lead to greater output.

To avoid runaway inflation we must have the resolve and the will to cease the inflationary expansion of credit, and to force the Federal Reserve System to stop purchasing assets, and thereby to stop its continued generation of chronic, accelerating inflation.

A money-substitute can be embodied either in a banknote or in a demand deposit with a bank subject to check (”checkbook money” or depos