A 100-Year Monetary Disorder

Brendan Brown

Chapter 1 in The Global Curse of the Federal Reserve, 2011, pp 1-40 from Palgrave Macmillan

Abstract: Abstract Curse is a strong word to use about the global influence of a 100-year institution headed throughout by officials dedicated to public service in the world’s greatest economy and greatest democracy. Yet, as the Scottish philosopher and economist John Stuart Mill wrote more than 200 years ago, the ‘machine of money’ has unique potential to cause trouble. Most of the time, Mill tells us, the machine called money is unimportant, but when it gets out of control it becomes the monkey wrench in all the other machinery of the economy (a line which Milton Friedman famously quoted on the eve of the first monetarist revolution – see Friedman, 2006). The machine of money in the US came under the command of the Federal Reserve soon after the outbreak of the First World War. The ensuing damage from a series of epic US monetary disorders has been of a global intensity that surely Mill himself could never have imagined. The US monetary machine when out of control becomes the monkey wrench in much of the other machinery of the global economy in countries far beyond the shores of the US, even on occasion unleashing forces in the geo-political landscape which determine war or peace.

Keywords: Interest Rate; Monetary Policy; Price Level; Federal Reserve; Credit Market (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-31411-5_1

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DOI: 10.1057/9780230314115_1

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