How do we bring about an end to boom, bust cycles? We could begin reforming the tax code in favor of liberty. The neoliberal model is overtly dependent on confiscatory taxation and the consequent impact of credit channels underwriting regulatory ambitions. But without profound institutional and operational changes to how the Federal Reserve works, we’re doomed. This is why the work of Stanford Universities John B. Taylor is significant.
Dr. Taylor worked under Paul Volcker during the Reagan administration, he possesses a few credible policy insights regarding currency arbitrage, carry trades and hosts of wonkish ideas about Treasury-Monetary accords etc. . .
Here’s why I write about him and his advocacy of a monetary rule: Janet Yellen’s disingenuous remarks recently about tax reform and her own reluctant insights into adopting the ‘Taylor Rule’. Current Congressional monetary policy is considering a reform bill that would enable the FED to select, devise and implement its own monetary rule. Here’s why: monetary rules would end accommodative policy, it would probably restrict interventions of scale into civil society like we witnessed throughout the Obama administration and its corrosive effects. By introducing a monetary rule limiting the FED, the FED’s discretion is limited, making policy more predictable.
This isn’t an attack on the Central Banks independence (more on that another time), instead it places monetary policy as an exercise of Congressional power, as it is prescribed by the Constitution.
Read on: John B. Taylor’s personal blog Economics One.