In a cry of desperation, Tim Duy takes to Bloomberg to warn the world about the possibility of “hard-money” advocates getting into the Fed. Why, there’s potential that new Fed governors might not be “divorced from political pressures.” Wouldn’t that be a radical shift.


The hilarity of this article is that the “hard money” label is being applied to defenders of a policy rule; specifically, John Taylor of “Taylor Rule” fame. Yes, the advocates of formula based interest rate shifts, who deride the true hard money of the classical gold standard, are now in the extremist hard money camp.

This is a classic case of taking a minuscule difference between apologists for monetary interventionism and blasting it out of proportion to redefine the debate. After all, if the rule-based advocates are the dangerous fringe, then the current fiat regime is normal and orthodox! Indeed, Duy makes it crystal clear that it is the Bernanke/Yellen clique that has saved the world and the “hard money” Taylorites are about to ruin it. This is the entire spectrum of monetary theory! No mention whatsoever of the true hard money camp: the Austrians and defenders of the 100% gold backed currency.

Duy warns that if these hard money villains had been in charge, their monetary policy would have been too tight and recession would have come by now. Of course, the job of the Fed shouldn’t be to avoid recession at all; it is the boom, not the bust that we ought to criticize. A recession, a liquidating of all the malinvestments caused by a loose Fed, is the healing process that we desperately needed. But we never got it. Hence the current sluggish economic condition.

To finish off, Duy complains that these rule-based advocates would turn policy far too tight, given “underlying economic conditions.” That’s always the ironic rub in the mainstream narrative. The Fed was allegedly the hero who saved the global economy, brought it forth into harmonious recovery. But this “recovered economy” isn’t even ready for a few rate increases after 8 years? Swell recovery.

Note: The views expressed on are not necessarily those of the Mises Institute.

Article by C. Jay Engel,