The Federal Reserve Board seeks to maintain an inflation rate around two percent per year. While this rate might sound low for older types who remember double-digit inflation rates in the late 70s and early 80s, and a rate of 5.4 percent as recently as 1990, why tolerate, let alone seek to sustain, any inflation at all? Why not seek to establish zero inflation and stable prices? After all, even an inflation rate of only two percent a year means nominal prices still double every 36 years. And while people can and do broadly adjust their behavior in the face of anticipated inflation, it’s not a seamless process. Inflation distorts people’s economic decisions, whether as producers or consumers, labor or capital, and so imposes costs on us all.
There’s some historical elegance to the fact that the Fed’s annual symposium in Jackson Hole, Wyoming, is roughly as old as the modern Fed itself. The symposium, hosted by the Federal Reserve Bank of Kansas City, started in 1978.
The current Liberty Law Talk is with Amity Shlaes on Calvin Coolidge. There are many impressive elements in Shlaes' new biography of the thirtieth president. Of note is Coolidge's discipline and refusal to place tax dollars at the service of numerous projects: agriculture, pensions, public works, etc. Federal coffers were flush, why not spend it, many asked? Coolidge frequently chose the pocket veto to say no to them. He vetoed over 50 bills while in office. So Ronald Reagan is adored by advocates of limited government, but it was Coolidge who actually cut the government, halved tax rates and didn't…
Banks are like governments, you can’t altogether do without them, however often you wish that you could. So when I read that one of the banks of which I am a small and unimportant customer had been engaged in the fraudulent manipulation of interest rates, fined accordingly, and denuded of its top management by involuntary resignation, I can’t say that I was altogether surprised.