A central bank digital currency is one of the worst financial ideas ever – US Congress hearing

Published in Smartereum.

Another member of the committee from R. Street Institute, Alex Pollock, argued that having a digital currency owned and regulated by the Central Bank is the worst financial idea in the recent times. According to Pollock, the digital currencies by the central bank would do nothing but increase the role and power of the central bank. It would also make the Central Bank an overwhelming credit allocator in the United States economy.

In Pollock’s words:

“Its safe to predict that the credit allocation of the central bank will undoubtedly become politicized. Taxpayers will be on hook for credit losses. The Central Bank will bear the risk directly.”

According to Pollock, if fiat money is digitized, the nature of the currency will not change and the Central Bank will still be responsible for issuing it. He said that cryptocurrencies are more or less the same as scrip.

Il Parlamento USA discute sul futuro delle crypto

Published in The Cryptonomist.

All’audizione parteciperanno il dr. Rodney J. Garratt, Maxwell C. e Mary Pellish Chairdell’Università della California a Santa Barbara, il Dr. Norbert J. Michel, Direttore del Centro per l’analisi dei dati della Heritage Foundation, il Dr. Eswar S. Prasad, Senior Fellow presso il Brookings Institution, e Alex J. Pollock, Distinguished Senior Fellow presso R Street Institute.

Humphrey-Hawkins originalist

Published in Grant’s Interest Rate Observer.

Supreme Court nominee Brett Kavanaugh isn’t the only news-making student of original American texts. Alex J. Pollock, distinguished senior fellow at the R Street Institute in Washington, D.C., is fresh from a deep reading of the 1978 Humphrey- Hawkins Act. What it says may surprise you.

It may surprise Jerome H. Powell, who is expected to deliver his semiannual Humphrey-Hawkins testimony (on the 40th anniversary of that oft invoked legislation) on July 17. If past is prologue, the new Fed chairman will advert to the central bank’s so-called dual mandate, i.e., the promotion of “price stability,” which the Fed defines as a 2% rate of inflation, and “full employment,” which the Fed is pleased to leave undefined.

Pollock—and we—have long wondered how stable prices could be if they’re always rising. Congress is not, in fact, the source of a law to command a quintupling in the price level over the course of an 82-year lifespan, which is the clear arithmetic implication of a 2% per annum inflation target. The brain boxes at the Eccles Building and their counterparts at central banks as far away as New Zealand dreamt it up all by themselves.

Never mind by what process of reasoning the Fed settled on 2%. Pollock rather asks, What does the law say?

The Federal Reserve Reform Act of 1977, for one, does not say “price stability,” as Pollock notes: “It does in particular not say ‘a stable rate of inflation.’ It says ‘stable prices.’ Does the term ‘stable prices’ mean perpetual inflation? What did Congress mean by ‘stable prices’ when it put that term into law?”