A trio of academic economists have taken a hard look at the Federal Reserve System and found it wanting, to put it mildly.

In a working paper for the libertarian Cato Institute, George Selgin, William D. Lastrapes and Lawrence H White write that, “Drawing on a wide range of recent empirical research, we find the following:

“(1) The Fed‘s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed‘s establishment.

“(2) While the Fed‘s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I.

“(3) Some proposed alternative arrangements might plausibly do better than the Fed as presently constituted.”

Selgin and Lastrape are economists at the University of Georgia. White is an economist at George Mason University.

Malcolm A. Kline is the Executive Director of Accuracy in Academia.
If you would like to comment on this article, e-mail mal.kline@academia.org.