The calamity behind formation of Fed — an Austrian school perspective..

As audit the Fed movement picks up heat, we need to again go back to historical reasons for setting up the central bank. Those who agree with the idea argue Fed has become way too powerful and has created enormous damage with its mon pol. So if we cant end the fed let us audit it. Those who are against the move, say just leave the Fed.

The Austrian school a long critic of central banking and Fed, are surely enjoying this. Long ignored by economists, their arguments are coming to fore pretty naturally given the errors central banks have made across the world.

Marc Thornton and Walter Block discuss in this audio interview their critic of Fed. They say how economists have ignored the real reasons behind formation of Fed and have stitched their own story to show the importance. As per them, Fed was an institution created for political and financial sector lobby reasons. A typical Austrian school perspective.

The real problem has been to ignore all alternative thoughts towards development of certain institutions and organisations. It has been a standard approach of taking your pick of favorites and pushing them through all possible channels. So all fiscal policy is bad and monetary policy is good forgetting the fact that central bank itself is a creation out of fiscal policy! And then we have added things like independence from government  but want these people to be elected and accountable to the government. Central banks in turn deal with fiat currency and government bonds, again both backed by govt.

All over the place really.

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