While price fixing is generally considered illegal, when the central banks do it, it is called capitalism…

Jeff Deist of Mises Institute has a piece which criticises Federal Reserve setting interest rates. But the criticism applies to all central banks generally.

He says generally economics says price fixing by any central agency is a bad thing and deemed as illegal. But when central banks fix interest rates it is called capitalism:

Economists, bankers, fund managers, and investors around the world are absolutely fixated on the Federal Reserve’s anticipated announcement this week, with many fearing that a rate hike could trigger more shocks like the recent Black Monday selloff.

In a world of social media and 24-hour news cycles, it’s fair to say Wednesday’s FOMC meeting in the Eccles Building has been the most widely reported and discussed central bank action in history. But missing from the coverage is one fundamental point: “monetary policy” and bureaucratic control over interest rates is not capitalism, it is outright centralized planning.

What else can we call the orchestration of a pivotal price signal in the worldwide economy by 12 individuals sitting in one room? If one accepts the Fed’s role in setting interest rates, it’s hard to understand where and when to draw the line. 

Why not prices of goods, services, and wages? If experts can determine the price of money, why can’t they determine the price of a bushel of wheat or an automobile? When the former Soviet Union’s State Committee on Prices attempted exactly that, western capitalists scoffed. Yet we accept centralized monetary planning as part and parcel of free markets!

As this blog keeps saying nothing is more ironical than seeing central bankers talk about free markets/capitalism..

 

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