The Case for a Monetary Rule in a Constitutional Democracy

FRB Richmond Economic Quarterly, Vol. 83, No. 2, Spring 1997, pp. 45-66

21 Pages Posted: 19 Nov 2012

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 1997

Abstract

Unrestrained power to create money makes possible the arbitrary seizure of property, either through an unlegislated transfer of wealth from the private to the public sector or through the capricious transfer of wealth between individuals. Money creation -- and by implication the seigniorage that flows from it as well as the price level fluctuations that derive from it -- should be subject to a clear legislative mandate. A congressional mandate requiring the Federal Reserve to stabilize the price level and to hold only government securities in its portfolio would complement constitutional limitations on the government's exercise of power.

Suggested Citation

Hetzel, Robert L., The Case for a Monetary Rule in a Constitutional Democracy (1997). FRB Richmond Economic Quarterly, Vol. 83, No. 2, Spring 1997, pp. 45-66, Available at SSRN: https://ssrn.com/abstract=2129859

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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