Will.he.is

I want to flag for a later conversation (once we have discussed central banks) George Will's op-ed today on the Federal Reserve.  Will discusses the perspectives of the heads of three of the Federal Reserve regional banks.  (As we will discuss, there are 12 of them around the U.S. Incidentally they are excellent sources for research papers and reports on the American economy and a range of economic issues - just click on the map in the previous links to go to the different sites.)  From Will's perspective, these three voices have it right, being in opposition to the views of Fed Chairman Ben Bernanke and a majority of the Fed's governing board. 

We will discuss this in a couple of weeks, so feel free to disregard for now, if this is new to you.  But the first step in Will's argument is theoretical: that the Fed should in general focusing on avoiding the creation of too much money and its mandate should be to prevent inflation.  This argument rests on the idea (what is often called a "monetarist" perspective) that the role of a central bank is to maintain a stable money supply and let the vacillations in the real economy work themselves out. Secondarily, he argues that the Fed's recent efforts to do otherwise - namely by creating lots of money in the hopes that it will stimulate spending in the economy - have not succeeded in their aim.  And third, he suggests that the Fed's actions have arrogated to the central bank the responsibilities of Congress; he says monetary policy has usurped fiscal policy. 

A couple of scattered thoughts, though I will save the debate for later.

1. For any Ron Paul fans in the room, this gets directly to what he considers the main economic challenge to our current system.  We can discuss.

2. This also relates to Simone's post about the decisions of Europe's central bank, and the national institutions that have to endorse or approve of these.