I rarely read Matthew Yglesias, but I came across the following by him and was shocked:
America’s current monetary policy—a fiat currency that’s freely exchangeable for other currencies and commodities—is the free market position.
I think he is wrong. After all, the current state monetary policy involves the Fed, a state created central fiat monetary authority that is also under the influence of banks. The official purpose of it is to address panics and manage employment, consumer prices, interest rates, and so on. Supposedly towards this it has been granted considerable control over the economy to say the least, such as a money monopoly and paper money, as well as other vast and discretionary powers, privileges and roles.
The federal government is also involved in other ways, such as by having implicit and explicit bailout guarantees and engaging in surprise bailouts, which the Fed seems to do as well. Both I believe also have a current role as a regulator. There is probably much more.
Basically, America’s current monetary policy is really one of corporate statism. It essentially empowers a few to impose fiat money creation and price inflation and as such to loot the people and distort the economy, perhaps to the benefit of the state, big and connected banks, and so on. It is also used to try to paper over boom-bust problems that come about due to this state interventionism and attempt at monetary and financial central planning.
These elites have secured for themselves with their political power over others the destructive position of not being as constrained like the rest of us by the need to economize when bidding for scarce resources. It is a monstrous creation that plagues the economy with the likes of greater moral hazard, malinvestment, and regime uncertainty. Though, this printing-as-wealth scheme, while not sound, doesn’t necessarily mean hyperinflation as it is often relatively restrained naturally and within the institution itself to boom-bust.
So, Yglesias is wrong. The free market position doesn’t favor this extreme statism. The free market position opposes the existence of state monetary policy and supports the separation of money and banking from the state.