Can Central Banks Be Tamed?

[GeorgiaAvenger]

http://mises.org/daily/6270/Can-Central-Banks-Be-Tamed

[Steven Douglas]

Blood boiling, I feel like rambling -- apologies in advance.

In the absence of force, is a central bank's ability to counterfeit wrong? Not necessarily, if taken on the individual level. If I run a bar, and make you aware that the drinks I serve are going to be watered down exponentially, in an effort to get you to spend more, you have the option to offer me less, or not do business with me at all. Assuming you are fully aware of this fact going into the arrangement, and it was not the result of some rule change that defrauded you along the way (i.e. I also diluted a bottle you paid for already and had reserved).

So long as you are not defrauded, and have the capacity not to engage in my products, there may well be no crime involved at all. It only becomes extortion and involuntary servitude the moment any kind of effective monopoly is declared, and you are left without any options or viable substitutions--the moment that "volunteering" became mandatory for everyone (including those who might have previously and knowingly only volunteered).

What angers me the most in all of this is the way in which both mainstream (Keynesian-Spawned) economists and policy makers have managed to insulate themselves altogether from all moral arguments.

WANTED: PEOPLE WHO ARE WILLING TO PAY TO GET THEIR HEADS THUMPED

Let's say that I ask people if I can thump them on the heads with a club for a fee (they pay me). Some of the more masochistic freaks and idiots take me up on my offer. Has a crime occurred? Not necessarily. Now I can talk endlessly about the overall economic effects of thumping people on their heads for a fee. And I can do this all very scientifically. Just the positive facts, and nothing but the positive facts, based on empirical data and evidences. And if I write enough papers on the subject, I can also be considered an Authority On Head Thumping.

Now comes a Policy Maker, who meets with me, as I am now The Very Scientific Head-Thumping-For-Fees Authority. We can both, with straight faces, talk about all the positive impacts on those who voluntarily paid to get their heads thumped, including studies that show that nobody was really injured in the process. So the Policy Maker, upon recommendations from me (the now In-House Foremost Head Thumping Authority), proposes a new law, wherein everyone must now get their heads thumped for a fee.

Now, with the question of who must pay to get their heads thumped out of the way, the only questions that remain are a) who decides how often and how hard to thump and b) for which fees. It is ultimately decided that it must all be left up to the Independent Discretion of the newly created Head Thumping Authority Syndicate.

Eventually, normalcy bias sets in, and a mantra is heard throughout the land:

"There are only two sure things in life: death and being forced to pay to get your head thumped."

Meanwhile, there is an outcry from some, who question my so-called authority, and are not prone to accept anything on faith. You are among those who come to me, The Scientific Head Thumping Authority, and say, "You can't force people to get their heads thumped, let alone charge them for it. That is criminal assault as well as extortion!"

And that is where I wash my hands, and put you squarely in your place, as you are clearly being naive. As The Distinguished Professor HeadThumper, I am quick to let you know that I am not a policy maker, and am therefore not concerned with moral arguments, but only positive, clinical facts. "See how that works?", I say. "I don't make the rules. I only model a range of policy maker choices, and attempt to describe their effects. I also make recommendations as to which Head Thumping Options I believe to be best, based on all available data, but I do not make the rules [that come from those recommendations]. I am Only A Distinguished Scientist. You must take up your moral and political objections with Senator Policymaker."

You then talk to Senator Policymaker, who also sees clearly that you are naive, and just don't understand how it all works. So he turns to you and says, "I am only a policy maker, and not a Head Thumping Authority! We are only basing our policies on the Very Scientifically-based Conclusions and Recommendations that came from the Head Thumping Authority. Take it up with them! In fact, we chartered an Independent Head Thumping Syndicate, staffed by Only The Finest Headthumping Authorities, to ensure that political and moral arguments are not at issue, and never enter into discussion. What more do you want?"

[/rant]

Short version: When I hear any mainstream economist say that his work deals only considered with logical positives, and not normative discussions (shoulds/oughts), my instinct, my overwhelming urge, is to want to punch him in the throat.

[Seraphim]

In short; yes.

Convert their coveted paper for their nemesis'; gold/silver.

Occum's Razor. That is all.

[Steven Douglas]

In short; yes.

Convert their coveted paper for their nemesis'; gold/silver.

Occum's Razor. That is all.

Short, sweet, and straight to the point, what concept. +rep