This is the Cato Daily Podcast for Thursday, December 31st, 2009. I'm Caleb Brown.

The rule of law matters and how we get our money matters.

The rule of law has only a loose connection to the broad discretionary authority of American

Central Bankers.

Economist Lawrence H. White, speaking at the Cato Institute's Monetary Conference in November,

said if the Rule of Law mattered much for our monetary policy

our money might be much more secure. The rule of law doesn't prevail in our

current monetary and financial system.

We don't have in high-x words, quote, government in all its actions bound by rules fixed and

announced beforehand.

Certainly not when financial markets are hanging on every word of the feds of speeches by Fed officials trying

to guess what the future policy actions are going to be.

So instead we have central bankers who are discretionary rulers over the economy's

monetary and financial institutions

so anyone who defends the rule of laws and abstract principle

ought to decry the rule of central bankers.

Central bankers today are not slaves of the law,

but they exercise very wide discretion.

We should find this troubling, even appalling.

Discretion doesn't give us better results, so it can't even be defended on pragmatic grounds.

We've all learned that the lack of pre-commitment in monetary policy can give us, despite the best of intentions, unwanted inflation.

We should also recognize that lack of pre-commitment in monetary policy, despite the best of intentions,

...