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Fall 2006

ISSN 0890-913X

Volume 22, Number 1

Categories: Finance | Fall 2006

The Control of Money

Mark A. Wynne, Federal Reserve Bank of Dallas

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JournalofPrivateEnterprise,VolumeXXII,Number1,Fall2006TheControlofMoneyMarkA.WynneFederalReserveBankofDallasStablemoneyisoneofthemostimportantprerequisitesoffreemarkets.InCapitalismandFreedom,MiltonFriedmanaddressedthequestionsofthemonetaryarrangementsmostconsistentwitheconomicfreedomwithinindividualcountriesandbetweencountries.InChapterIIIFriedmantookontheissueofhowmonetarypolicyshouldbemadeinafreesociety.Acknowledgingalegitimateroleforgovernmentinthemanagementofmoney,Friedmanposedthechallengeasbeingthatofcomingupwith"...astablemonetaryframeworkforafreesociety"andmorespecifically"toestablishinstitutionalarrangementsthatwillenablegovernmenttoexerciseresponsibilityformoney,yetatthesametimelimitthepowertherebygiventogovernmentandpreventthepowerfrombeingusedinwaysthatwilltendtoweakenratherthanstrengthenafreesociety"(39).Heassessedtherelativemeritsofcommoditystandardsandindependentcentralbanks,andconcludedbyarguingthataruleprescribingthattheFederalReserveSystem(Fed)keepsomemeasureofthemoneystockgrowingatsomeconstantrateispreferabletoeither.InChapterIV,Friedmantookonthequestionofinternationalmonetaryarrangements.Atthetime,theBrettonWoodssystemoffixedexchangerateswasstillinplace.Friedmanarguedthat"...themostseriousshort-runthreattoeconomicfreedomintheUnitedStatestoday...isthatweshallbeledtoadoptfar-reachingeconomiccontrolsto'solve'balanceofpaymentsproblems"(57).Intheinternationalarena,Friedmansawthemainchallengeasbeingnottosolveabalanceofpaymentsproblem,buttosolvethebalanceofpaymentsproblem.ReprisingtheargumentsofFriedman(1953),hearguedforfreelyfloatingexchangerates.ThispaperreviewsFriedrnan'sproposals,andMarkA.Wynne53

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Metadata [hide]

Title	The Control of Money
Authors/Creators:	Mark A. Wynne, Federal Reserve Bank of Dallas
Year:	2006
Volume:	22
Number:	1
Pages:	53 - 83
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Money, Milton Friedman, Currencies, Capitalism, Commodities, Market economy, Central banking

Citation:
Wynne, Mark A. / 2006. "The Control of Money." The Journal of Private Enterprise, 22(1): 53-83.