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Chicago Economist Called the Fed a "Cancer"

This is from the in-case-you-missed-it files. Thomas Sowell, my favorite Chicago economist, was a long-time supporter of the Federal Reserve bound by a Friedmanite monetary rule.  In an interview in 2010, he called the Fed a "cancer" and advocated its abolition.  It is no exaggeration to suggest that Sowell's conversion to the anti-Fed view, and that of a number of economists since,  reflects Murray Rothbard's ongoing influence by way of Ron Paul.  The fact that the recent and rapid surge of anti-Fed sentiment is now intellectually respectable, even among economists, inverts the "intellectual structure of production" model upheld by many libertarians.  This model, which is fallaciously attributed to Friedrich Hayek, supposes that all radical change in politico-economic opinion is initiated by academics and trickles down through policy wonks, journalists, Congressional aides, etc. to the masses.  In this case, Ron Paul was able to effectively use the "populist model" to deliver Rothbard's radical critique of the Fed directly to the public, which changed the climate of opinion in defiance of  the academics and media opinion molders, some of whom have courageously broken ranks and rejected the conventional wisdom.  

 

 

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Contact Joseph T. Salerno

Joseph Salerno is academic vice president of the Mises Institute, professor emeritus of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics.

 
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