Politics
Out of context: Reply #3293
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- tommyo0
The Importance of Capital Theory
by Bob Murphy on 10/22/08"In other words, the business cycle is not natural to the free market. It is the consequence of central bank distortion of the interest rate. It's odd that many "free market" economists overlook this obvious fact. After all, if the federal government appointed really smart people to the post of setting a "target Ford F-150 price," or a "target barrel of oil price," most free market analysts would say, "Hey! That's price control! Let the market determine those things."
But for some reason, this common sense evaporates when it comes to the "target federal funds rate," i.e. the interest rate banks charge each other for overnight loans of reserves. There are some notable exceptions; see for example this great piece by (pro-gold standard) Judy Shelton in the Wall Street Journal recently."