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Posted By Don Boudreaux On December 4, 2012 @ 11:28 pm In Hubris and humility,Monetary Policy,State of Macro | Comments Disabled
To some extent the problem is too much rather than too little imagination. With fiat money, and a discretionary central bank, it’s always theoretically possible to have the money stock (or some other nominal variable) behave just like it ought to, according to whichever macroeconomic theory or model one prefers. In other words, a modern central bank is always technically capable of doing the right thing, just as a chimpanzee jumping on a keyboard is technically capable of typing-out War and Peace.
If we understand, as most of us correctly do, that it’s the height of foolishness to rely upon, say, a centralized monopoly steel board to determine what is the ‘optimal’ supply of steel at any moment  – and to rely upon that same cabal of alleged steel ‘experts’ also to bring that supply efficiently to market – why do we not understand that it is at least equally foolish to rely upon a cabal of monopoly-power-invested bureaucrats to make the same determination and to perform the same responsibilities with the supply of money?
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 Here’s the great George Selgin on the disturbing and destructive condition of Fedophilia: http://www.freebanking.org/2012/12/03/fedophilia/
 it’s the height of foolishness to rely upon, say, a centralized monopoly steel board to determine what is the ‘optimal’ supply of steel at any moment: http://cafehayek.com/2008/09/good-thing-we-h.html
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