George Selgin on the Fed

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4.7 • 4.3K Ratings

🗓️ 6 December 2010

⏱️ 78 minutes

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Summary

George Selgin, of the University of Georgia, talks with EconTalk host Russ Roberts about whether the creation of the Federal Reserve in 1913 has been a boon or a bust for the U.S. economy. Drawing on a recent paper by William Lastrapes and Lawrence White recently released by the Cato Institute, "Has the Fed Been a Failure?" Selgin argues that the Fed has done poorly at two missions often deemed to justify a central bank: lender of last resort and smoother of the business cycle. Selgin makes the case that avoiding bank runs and bank panics does not require a central bank and that contrary to received wisdom, it is hard to argue that the Fed has smoothed the business cycle. Additional topics discussed include whether the Fed has the information to do its jobs well, the role of the Fed in moral hazard, and the potential for the gold standard to outperform the Fed.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you.
0:36.7	Today is December 2nd, 2010, and my guest is George Selgin of the University of Georgia and
0:44.9	the author, along with William Lestrapp's and Lawrence White, of a recent Cato Institute
0:49.9	working paper entitled, Has the Fed Been a Failure? Question work. George, welcome back
0:56.6	to econtalk.
0:57.6	That's nice to be back, Russ.
0:59.4	I want to start by reminding listeners that you can follow me on Twitter at econtalker.
1:05.3	econtalker. And my Twitter feed, I talk about upcoming guests on econtalk, sometimes
1:11.2	comment about the podcast, and occasionally make observations about the world around
1:15.8	us, limited, of course, to 140 characters. If you are a Twitter person, econtalker is
1:20.9	the way to follow me and econtalk. Now on to today's conversation. Our topic today,
1:26.8	George, is the paper I just mentioned, Has the Fed Been a Failure? I put the question
1:31.5	mark in there, which is in the title of the paper. Of course, one could also put an exclamation
1:35.9	point at the end of the title. It would not be a traditional way to title a paper like
1:41.2	that. But the question is whether the address of the paper is whether the Fed has improved
1:46.1	economic performance since its establishment in 1913. The mainstream view, at least until
1:51.0	recently, is of course the Fed has improved economic performance. As a lender of last resort,
1:56.9	it eliminated the bank runs and panics of the 19th century. And while its early years
	...

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