Free Banking is now Alt-M

The leading arguments for banning large-denomination currency notes are those made in a much-cited working paper by Peter Sands and at book length by Kenneth Rogoff. They have been rebutted persuasively by Pierre Lemieux and Jeffrey Hummel in their respective reviews of Rogoff’s book. I have previously…

The post More Evidence of the High Collateral Damage of a War on Cash appeared first on Alt-M.

Many commentators have compared Bitcoin to gold as an investment asset. “Can Bitcoin Be Gold 2.0?,” asks a portfolio analyst. “Bitcoin is increasingly set to replace gold as a hedge against uncertainty,” suggests a Cointelegraph reporter. Economists, by contrast, are more interested in considering how a monetary…

The post How a Bitcoin System is Like and Unlike a Gold Standard appeared first on Alt-M.

(Originally appeared  December 21, 2014) As is usual this time of year, my mom and brother, and a close friend or two, asked me to share with them some of the items I’d included in the list they assumed I’d already mailed to the North Pole, as…

The post <span class=”friday”>Friday</span> <span class=”flashback”>Flashback:</span> A Free Banker’s Christmas Wish List appeared first on Alt-M.

Some years ago I published a paper on the banking theory and policy views of the important twentieth-century economist Friedrich A. Hayek, entitled “Why Didn’t Hayek Favor Laissez Faire in Banking?”[1] Very recently, working on a new paper on Hayek’s changing views of the gold standard, I…

The post Hayek on the Creation of Moral Hazard by Central Banks appeared first on Alt-M.

Fed economists defending interest on reserves have recently called on an unexpected quarter by reviving interest in Milton Friedman’s 1969 essay, “The Optimum Quantity of Money.”[1] As Ben Bernanke and Don Kohn put it, “Before the Fed paid interest on reserves, banks engaged in wasteful and inefficient…

The post Optiquandary: A Practical Problem with Friedman’s “Optimum Quantity of Money” appeared first on Alt-M.

The Cat’s Out of the Bag In September, when current Fed chair Janet Yellen held a press conference announcing details of the Fed’s normalization plan, yours truly insisted that that plan reflected the Fed’s “determination to maintain its current, bureaucratically advantageous operating system,” in which monetary policy…

The post Yellen’s Defense of Interest on Reserves appeared first on Alt-M.

(Originally appeared November 27, 2014) Happy Thanksgiving to all of my fellow free bankers out there! Today is our biggest secular national holiday. Not everyone celebrates Christmas or Easter much less other national holidays like Memorial Day or Labor Day, but I don’t know anyone who doesn’t…

The post <span class=”friday”>Friday</span> <span class=”flashback”>Flashback:</span> Thanksgiving: A Celebration of American Currency Competition appeared first on Alt-M.

On Friday, the Treasury Department released a report on Financial Stability Oversight Council (FSOC) designations. This report could have addressed the problem underlying FSOC’s designation authority: the fact that it makes explicit which financial institutions are “too big to fail,” paving the way for more bailouts of…

The post Treasury FSOC Report’s Troubling Bailout Specter appeared first on Alt-M.

In his recent post exploring the welfare implications of the Fed paying interest on reserves, George Selgin observed that if banks failed to maintain optimal reserves, the problem was either incorrect remuneration of reserves themselves, or the Fed’s mispricing of short-term (intraday or overnight) credit. Regarding the latter,…

The post The Fed’s Mispricing of Liquidity: Nothing New Under the Sun appeared first on Alt-M.

President Trump’s nomination of Jerome Powell as the next chairman of the Federal Reserve System is a bet that he will continue Janet Yellen’s policies and not rock financial markets. The expectation is that Powell will follow the Fed’s already-announced normalization schedule, which calls for slowly reducing…

The post Powell’s Challenge: Unwinding the Fed’s Unconventional Monetary Policy appeared first on Alt-M.

The president just announced his pick to chair the Federal Reserve  System. Subject to Senate confirmation, current Fed governor Jerome “Jay” Powell will succeed Janet Yellen as Fed chair in February 2018. Market reaction to this announcement has been sanguine, with commentators describing Powell as the “continuity candidate.”…

The post Trump Taps Jerome Powell to Chair Fed appeared first on Alt-M.

This primer is supposed to introduce readers to the workings of the present U.S. monetary system. So it’s only natural that it should take established monetary arrangements for granted, including an official, “fiat” dollar currency managed by the Federal Reserve System. And while I haven’t hesitated to…

The post A Monetary Policy Primer, Part 12: Monetary Alternatives appeared first on Alt-M.

The Bitcoin system has the great virtue of securely sending value directly from stranger to stranger. It is open to anyone, anywhere in the world. The sender does not need to trust the recipient, nor any bank or other institution, to accurately record the transfer. The Bitcoin…

The post Blockchain + Gold appeared first on Alt-M.