Monday, May 7, 2012

Klein's Testimony on the Federal Reserve

The written testimony Peter Klein is presenting to the U. S. House Committee on Financial Services, Domestic and Monetary Policy Technology Subcommittee is now available on-line. Klein is appearing before the committee along with my department chair, Jeff Herbener. They will be going up against some pretty  big names: John B. Taylor, Alice Rivlin, and James K. Galbraith.

Klein's specialty is the economic theory of organizations, especially how organizational structure and the institutional environment effects a firm's ability to efficiently serve customers, and hence earn profits.  As such, his comments focus on the challenges faced by a central money printing machine when trying to manage an economy. On the prospects for successful monetary management by the Fed, Klein writes:
The mistakes made by the Fed before and after 2008 are not isolated incidents, mistakes that can be corrected by making minor changes to the Fed’s charter, structure, or independence. They are the predictable result of giving control of the monetary and financial system to a government agency. The best option is to replace the central bank and let the market be in charge of money.

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