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Crazy About the Fed

Here’s a letter to the New York Times:

Bill Keller reports that Glenn Hubbard – Columbia University economist and advisor to Mitt Romney’s campaign – proclaims that “Nobody who is taken seriously as an economist is going to say ‘cancel the Fed'”; such a notion, says Prof. Hubbard, is “just crazy” (“The Politics of Economics in the Age of Shouting,” Nov. 28).

To propose the abolition of central banking is indeed crazy today – just as, say, proposing the abolition of slavery was crazy in 1812, or proposing the abolition of military conscription was crazy in 1952.  The dominance of the unexamined premises of too many Right-thinking Serious people in the past suffocated practical efforts to fundamentally reform the way labor was supplied to plantation owners and, later, to the military.  Similar unexamined premises today suffocate practical efforts to fundamentally reform the way money is supplied to the economy.

As Prof. Hubbard surely knows, though, the case for central banking is hardly settled; it continues to be debated by serious scholars.  Prof. Hubbard also surely knows that the case for replacing central banking with a more decentralized, privatized, and competitive arrangement is real and rests on significant theoretical and historical research published in premier outlets and conducted by economists with impeccable scientific credentials – economists such as Kevin Dowd, Steve Horwitz, Benjamin Klein, Kurt Schuler, George Selgin, Richard Timberlake, Gordon Tullock, Lawrence H. White, Leland Yeager, as well as by the late F.A. Hayek and Vera Smith.

Donald J. Boudreaux


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