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
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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The Federal Reserve Is Both Too Politicized and Too Powerful
“If we don’t want history to remember COVID-19 as the event that cemented political control over monetary policy, we need to act soon. The Fed’s emergency programs must be halted and eventually retired; its balance sheet must shrink to pre-crisis levels; and Congress must cease directing the Fed to engage in fiscal policy, even amidst extraordinary economic turmoil.” ~ Alexander W. Salter
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The Fed Can’t Make Pi
“Changing the value of pi would be a disaster for physics, engineering, and architecture. Changing the definition of liquidity would be a disaster for the economy.” ~ Thomas L. Hogan
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That Civilized Relic: A Monetary System as Good as Gold
“The gold standard isn’t perfect. No system is. But it has many virtues. A strong case can be made that it’s the best of all feasible institutional alternatives. As my dissertation adviser, Lawrence White, puts it: The gold standard is still the gold standard among monetary systems.” ~
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A Keynesian Path Would Be the Wrong Path for the U.S. Economy
“Following a crisis, countries with higher levels of economic freedom–that is, with institutions closer to those proposed by Hayek than Keynes–suffered smaller economic contractions and faster recoveries. Keynesian ideas have dominated the political worldview for decades. But we would be better off following Hayek.” ~ Nicolás Cachanosky
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Where Have All the Coins Gone?
“We should acknowledge the weaknesses of our current system and make improvements if possible. At a minimum, that means scrapping the penny. More fundamental reforms, like permitting competition in coinage, would be better still.” ~ William J. Luther
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What Can Be Done to Remedy the Coin Shortage?
“The US Mint could focus all of its resources on producing dimes and quarters, not silly pennies. This would put an end to the US’s coin shortage, almost immediately.” ~ J.P. Koning
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The Reluctant Fed
“Fed officials should follow the example set by Ben Bernanke. They should be ‘extremely reluctant’ to engage in facilities like the MSLP, SMCCF, and PMCCF. Such programs are ‘outside the range of [the Fed’s] responsibilities.’ They are fiscal policies that ‘are best resolved by Congress’ since they require ‘balancing political and social priorities.'” ~ Thomas L. Hogan
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Should Those Passing Counterfeits be Treated like Counterfeiters?
“It seems odd that the crime of uttering currency is considered to be so grave an offense in this day and age. Reducing the punishment might cause law enforcement officers to approach cases of uttering as they do other less serious, non-violent offenses.” ~ J.P. Koning
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COVID-19 Made the Federal Reserve Sick
“The change in the Fed’s mandate is not something we can afford to ignore. Its new policies come with significant economic and political costs. If we do not come to grips with them, the Fed might not be able to help much when the next crisis hits.” ~ Alexander W. Salter
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The Fed Is Not Independent, But It Should Be
“To be an effective central bank, the Fed must strive to remain independent of short-term political influence. A strict separation of monetary and fiscal policies helps bolster central bank independence.” ~ Thomas L. Hogan
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How the Federal Reserve Literally Makes Money
“The Fed is spending up to US$2.3 trillion to help save the U.S. economy from the coronavirus recession. But where does all that money come from?” ~ William J. Luther
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