Central banking has cultivated a reputation as the most technocratic, apolitical branch of government. That era is ending. Richard Cantillon
is about to become the most important 18th century philosopher you’d never heard of: the Cantillon Effect
is the idea that increasing the money supply has important distributional
- and so political - consequences. Today that means that, though intervention is sold as a public good, the financial institutions that are the Fed’s intermediaries reap the biggest benefits.
An unlikely alliance of left- and right-wing critics share this critique. From the libertarian right, Allen Farrington says “This is Not Capitalism
” (thanks Ian
for the link) and destroys economic well-being. From the left, Matt Stoller argues
that we need new institutional arrangements that bypass Big Finance. Do read both pieces. I suspect pandemic-induced monetary intervention will fuel a new radicalism that cuts across party lines with difficult-to-categorise planks - possibly anti-fiat money, anti-financialisation
, pro-UBI? The fight for the post-coronavirus era will be fierce and fascinating.