02 Oct 2015

“Fed on Trial”

Federal Reserve 8 Comments

C-SPAN has posted the footage from FreedomFest in Vegas this past July. If you’re bored, at least check out 12:20 when Kennedy hugs me. Bucket list item, check.

8 Responses to ““Fed on Trial””

  1. Tel says:

    Cool video. I must admit I tend to support the third witness… the Fed gets blamed for too many things. The Fed is one type of central planning and interference in the economy, but it’s not the only type, nor even the most significant. Getting such a singular focus on one institution among many perhaps misses the point a little bit. Government interferes in the marketplace all over the place, some of it very heavy handed and blatant. There’s so many things worth fixing.

    Good that Murphy dragged up Walter Bagehot and the idea of the “last resort” being logically necessarily above market price because anything below market price is hardly going to be a last resort. I’m surprised that didn’t just end the matter. However, personally I do think the idea of a Bagehot-style lender of last resort would be a good thing to have. Sadly, it’s not what we have right now, but there’s one really obvious reason for that:

    The effective “last resort” circuit breaker position of the central bank is rendered useless by it’s dual mandate which is stupid Keynesian stimulus in disguise. Throw away the dual mandate completely, give the Fed the target of stabilizing the money supply and nothing else. Do one job and do it well. So before ending the Fed completely, at least just get rid of the bone headed idea that it’s the Fed’s job to fix employment, especially when other branches of government go out of their way to put as many people out of work as possible. OK, there still may be some problems, but if you had to put your finger on the one single thing that was blocking modern economic intellectual progress. Just one thing that was wrong and which fooled more people than anything else… you would have to choose Keynesian stimulus, surely?

    • Andrew_FL says:

      Even Bagehot didn’t think the lender of last resort was a good idea, he thought it was necessary given the Bank of England existed and had legal monopoly privileges.

      “I have tediously insisted that the natural system of banking is that of many banks keeping their own cash reserve, with the penalty of failure before them if they neglect it. I have shown that our system is that of a single bank keeping the whole reserve under no effectual penalty of failure. And yet I propose to retain that system, and only attempt to mend and palliate it.”

      Bagehot admitted his proposal was a second best solution. He favored it because he believed the alternative, best solution was politically impossible “You might as well, or better, try to alter the English monarchy and substitute a republic, as to alter the present constitution of the English money market”

      Bagehot was a defeatist liberal, not an excessively idealistic progressive envisioning an ideal Central Bank that could never exist in the real world.

  2. Z says:

    Bob, I have a question. Suppose that Austrian Economics and its derivatives are false (Of course if free will exists, which I’m assuming is one of your beliefs, only certain idea are falsifiable, and it doesn’t mean other schools are therefore correct), would you still be opposed to the Federal Reserve and central banking on moral grounds (assuming morality exists)? How much of a benefit to the economy would the Federal Reserve have to be before you would change that view, if that all?

    • Major.Freedom says:

      If I supposed up were down, and black were white, then I am open minded enough to admit that I would be thinking down and white when I’m looking at what is actually up and black.

      Here’s a question for you. Suppose we took your question

      “How much of a benefit to the economy would the Federal Reserve have to be before you would change that view, if that all?”

      and understood your use of the words “benefit to the economy” and “you would change” to mean you are NOT referring to agency and choice in people? That those words you are writing are merely the outcome of pure mechanical cause and effect laws?

      That the concepts “benefit” and “you would change” actually don’t mean anything different from “no benefit” and “you cannot change anything” since they are both outcomes of the exact same physical laws? Where even your judging of something to be a benefit is on no higher a cognitive referent to reality as someone else judging that same something to be of no benefit?

      If everything is as you say the outcome of pure physical laws only, then you asking Bob whether he would “change his mind” is like asking a tree or river to change its mind, and that whatever Bob thinks, is not really wrong and cannot be wrong since everything he thinks and does cannot be viewed as bad choices having been made since his thought patterns are just as purely deterministic as yours.

      • Z says:

        I personally don’t believe free will exists, I think all the words I write are the outcome of cause and effect laws, yes. But I am asking him based on his own set of assumptions, not necessarily mine. I’m guessing Bob does believe in free will. He may not believe, on the other hand, that there is any coherent measure of ‘benefit’ in terms of an economy, however. But regardless, I meant if he did believe free will exists.

  3. Josiah says:


    When you keep posting this in different places, it puts pressure on me to keep coming up with different response jokes. That’s not fair.

    • Major.Freedom says:

      Well Blackadder was cancelled a long time ago.

      There’s been some new jokes made since then to lift from.

      Hey, maybe your flair should be changed to a picture of Carlos Mencia. Or Dane Cook.

      That would be funny.

    • Bob Murphy says:

      Josiah you could always say, “I heard you the 3rd time.”

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