The Sound Money Project was founded in January 2009 to conduct research and promote awareness about monetary stability and financial privacy. The project is comprised of leading academics and practitioners in money, banking, and macroeconomics. It offers regular commentary and in-depth analysis on monetary policy, alternative monetary systems, financial markets regulation, cryptocurrencies, and the history of monetary and macroeconomic thought. For the latest on sound money issues, subscribe to our working paper series and follow along on Twitter or Facebook.
Advisory Board: Steve H. Hanke, Jerry L. Jordan, Lawrence H. White
Director: William J. Luther
Senior Fellows: Nicolás Cachanosky, Gerald P. Dwyer, Joshua R. Hendrickson, Thomas L. Hogan, Gerald P. O’Driscoll, Jr., Alexander W. Salter
Fellows: James L. Caton, J.P. Koning
Average Inflation Targeting and Expectations
“If credible and clearly articulated, an average inflation targeting regime would provide a better anchor for inflation expectations than a period-by-period inflation targeting regime. Alas, the Fed’s new policy strategy has not been clearly articulated, leaving short-run inflation expectations unanchored.” ~ William J. Luther
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The Myth of the Crowding-Out Myth
“Recognizing that private investment usually works better than public investment does not mean that public investment is never desirable. But it does put the burden of proof on those who champion public investment projects. Rather than offering faux refutations of the crowding-out argument and citing anecdotal evidence, as Skidelsky does, those in favor of a public investment project should make the case for why it is desirable.” ~ William J. Luther & Nicolás Cachanosky
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Raising Inflation Expectations by Targeting the Average Rate of Inflation
“The Federal Reserve has increased its commitment to offset a fall in the total level of expenditures in response to an economic downturn. Absent a systematic disruption in the structure of international monetary arrangements or another factor that cannot be offset by monetary policy, the FOMC will ensure that downturns are met with accommodation from monetary policy.” ~ James L. Caton
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AMPLs and YAMs aren’t Monies; They are Gambling Technologies
“It’s hard to see why AMPL or YAM could ever replace a dollar. While the price of these tokens is relatively benign, their quantity fluctuates wildly. So the total purchasing power of AMPLs (or YAMs) held in one’s wallet is quite volatile despite the purchasing power of a given AMPL (or YAM) being stable. Put plainly, these aren’t dollar substitutes.” ~ J.P. Koning
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The Fed Needs a Shed
“The crisis period is now behind us. The need for these facilities, if ever there was one, is now past. It’s time to put away the emergency lending tools.” ~ Thomas L. Hogan
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Can the Fed Reduce Inequality?
“If the Fed aims to reduce inequality, it should use policies that are known to be effective. There is little scope for affecting inequality with monetary policy. Reducing banks’ regulatory burden reduces inequality by improving the lives of Americans with the lowest incomes.” ~ Thomas L. Hogan
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Judy Shelton is Right About the Gold Standard
“When it comes to the gold standard, the experts have spent too much time reading their textbooks and not enough time studying actual history. Empirical questions require empirical answers, and no amount of armchair theorizing can settle how gold stacks up to fiat money. On this, Dr. Shelton is right and the commentariat wrong.” ~ Alexander W. Salter
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Powell Must Choose: Fiscal Restraint or Runaway Inflation
“Jerome Powell and those steering fiscal policy choose from two paths: fiscal responsibility or monetary debasement. If he is unable to maintain stable expectations of low inflation, the latter path awaits.” ~ James L. Caton
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The Fiscal Fed
“Allowing the Fed to become a catch-all institution undermines its independence and ability to conduct monetary policy. If every job is the Fed’s job, it won’t do any of them well.” ~ Nicolás Cachanosky
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So-Called Stablecoins
“Regular consumers are slowly becoming more interested in financial privacy. But they shouldn’t have to rely on systems that ignore the law. A more durable solution is to work towards changing those laws.” ~ J.P. Koning
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Long-Discredited Positions on the Monetary System
“Considering the evidence, it appears to be Mr. Rattner, rather than Ms. Shelton, who holds “long-discredited positions on the monetary system.” Historical bank failures and crises, particularly during the Great Depression, are generally attributable to interference by regulators and central bankers, not to the gold standard.” ~ Thomas L. Hogan
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Inflation, Credit Allocation, and the Fed
“At the behest of Congress, the Fed has opened new facilities far afield of its traditional mandate. There is still some risk that the Fed will lose control and inflation will get out of hand. But there is a much bigger risk that the Fed will misallocate credit, reducing long run economic growth in the process.” ~ James L. Caton
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