A Cheer or a Bronx Cheer for the Fed?

Federal-Reserve-BuildingIn the financial crisis of 2007 through 2009, the Federal Reserve expanded its balance sheet to finance the bust, just as intended by its legislative fathers of a century ago. They did not, of course, intend for their creation to have stoked the housing bubble in the first place. This dramatic action to make up for its own mistakes was not a first—recall the Fed’s celebrated anti-inflation strategy of the early 1980s, a reaction to its 1970s blunders that had created the Great Inflation of that previous time.

The latest crisis has been over for five years, but the Fed’s balance sheet is more bloated than ever. Its much-discussed “taper” only slowed down the rate of bloating.

Read More

The Fundamental Left-Right Divide

In her first formal appearance as head of the United States Federal Reserve, Janet Yellen obliquely suggested the Fed might not raise its mighty “federal funds” rate to tighten the economy until months after its Quantitative Easing bond purchasing ended completely, coyly portending cheap money indefinitely. The market shuddered but soon calmed at the soothing voice of its controller.

Read More

The Marriage of Governments and Banks—For Better or for Worse

Charles Calomiris and Stephen Haber, combining their scholarly command of banking and political institutions, have published a book full of fertile ideas, instructive histories of the evolution of a number of banking systems, and provocative interpretations of the co-dependency between banks and governments.

Read More

Friday Roundup, February 7th

February's Liberty Law Forum engages the questions of what is American liberty and what is required to support it. Lead essay by Ted McAllister with responses from Bradley Thompson, (and upcoming) Steven Grosby, Bill Dennis, and Hans Eicholz. Getting from aid to enterprise: The next Liberty Law Talk discusses with Michael Miller, director of the Acton Institute's PovertyCure documentary, the conditions that should guide any approach to assist human flourishing in the poor regions of the world. Frequently missing, Miller highlights, in current interventions is an understanding of how crucial the rule of law, property rights, and markets are in the…

Read More

Friday Roundup, October 11th

Edmund Burke studies: Bruce Frohnen makes an appearance in our feature review this week and takes a new book on Edmund Burke to task: In a rather facile first chapter, “Burke in Brief: A ‘Philosophical’ Primer,” Maciag goes further, dismissing Burke as a political philosopher by asserting that “whatever ‘philosophy’ Burke expounded was extracted by others from his pamphlets, letters, and orations, which were produced in the heat of political battle.” Minimizing Burke’s explicitly philosophical and aesthetic works, Maciag also eschews engagement with the substantial literature on the philosophical underpinnings of prudence and the commitment to tradition (one need only mention…

Read More

Debt? No Prob

Come tomorrow or whatever, the government may not open. (They’re closing down all “non-essential” offices, such as the Department of State: we’ll be leading from way behind. Any office that doles out money will remain open.) Soon in this theater: the debt ceiling, and more needless contretemps. The easy solution comes (as often) from my buddy Alex Pollock. In this case, he cheerfully concedes that the idea wasn’t his but President Eisenhower’s, way back in 1954: In order to keep making payments, the Treasury increased its gold certificate deposits at the Federal Reserve, which it could do from its dollar “profits”…

Read More

Friday Roundup, September 6th

"Is the Federal Reserve Constitutional?" Essays in this month's Liberty Forum from Peter Conti-Brown, Richard Timberlake, and Gerard Magliocca consider different aspects of this important question. "The Legal Historian as Entomologist" is this week's review essay of David Rabban's Law's History: American Legal Thought and the Transatlantic Turn to History. John McGinnis' essay concludes that legal history's real work is in probing the historical meaning of fixed texts rather than charting the history of the evolution of the common law. Insofar as originalism continues to gain currency, it makes history directly relevant to current law. But rather than to trace a concept…

Read More

Friday Roundup, April 26th

The current Liberty Law Talk is a discussion with Paula Baker on her new book, Curbing Campaign Cash. You might recall former FEC Commissioner Brad Smith’s review of the book in this space. Before Super PACs, McCain-Feingold, “soft money,” and the Keating 5; before Watergate, and even before Teapot Dome, there was the Michigan Senate race of 1918. . . . one of the nation’s most contested elections and earliest campaign finance “scandals. . . . Unlike the typical political saga, however, Baker presents the story not as a morality tale of honest government corrupted by big money, but rather as…

Read More

When Government Goes Into Business

The sequester is kicking in, and the consequences are upon us: airplanes are falling out of the sky, furloughed FBI agents commiserate over donuts, sea levels keep rising. Help, however, is on the way. Increasingly, federal agencies are funding themselves from sources other than appropriations. Not a few have turned into profit centers for the Congress.

Just last week, the Federal Reserve proposed a fee schedule for its banking oversight “services,” pursuant to section 318 of Dodd-Frank and to the tune of $440 million. (That’s what the exercise supposedly costs the government. What it costs the banks and the economy, no one knows.) Not everyone is happy with the NPR—see here.

Read More