The Fed

Recorded on 4 December 2010 in Rochester, New York.

One would think that being on the inside of many decades of careening one step ahead of monetary chaos might induce a sober, even cynical, spirit — that it might lead the insider to call for keeping one's metaphorical air-raid shelter well stocked and at the ready.

Burns's diary is page after page of political dirty dealing, lying, and backstabbing. Nixon went so far as to plant negative press about Burns and threatened to expand the Fed's Board of Governors to dilute the chairman's influence.

Paul Krugman took a macro forecast from Mark Zandi, and then after the fact compared it to the actual trajectory of GDP. Krugman concluded that Keynesian theory was vindicated, when in fact the results are more in line with what the critics predicted would happen.

As a developer, I do not hire an employee before I have conceived of a construction activity that will earn me a decent return. I hire an employee when I have a productive need for his services.

Fiat money — or, to be more precise, its production — is already a violation of the free-market principle; and fractional-reserve banking amounts to leveraging the economic consequences of fiat money. Austrians favor a money that is freely chosen and operates by market principles.

Just before the beginning of the crisis, work produced by a variety of leading economists was very positive on the state of macroeconomics; it concluded that the field had made big advances in the last decades. A sample of their comments is offered below.

Jim Manzi has been challenging mainstream economists to defend their models, which tout the benefits of fiscal and monetary "stimulus." Manzi has repeatedly asked why he should put any faith in the predictions of these models.

Conservative Republicans are justified in switching their allegiance to the Austrian economists, because supply-side monetarists have a glaring blind spot when it comes to the Federal Reserve.

If the Fed had been tracking repos in 2007–2008, what they would have seen was the unfolding of the financial crisis one full year before it went critical. Instead, Bernanke stopped collecting the data because he decided to abolish M3.