September 21, 2012 2:11PM

‘Has the Fed Been a Failure?’

That is the provocative title of the lead paper in the prestigious economics publication, the Journal of Macroeconomics. It is authored by George Selgin, William D. Lastrapes, and Lawrence H. White. (Selgin and White are professors, Cato scholars, and many-time participants in the annual Cato monetary conference).

The journal's editor considered the paper so important that he devoted a section of the September issue to it, with discussion by a number of prestigious economists, including professors Allan Meltzer and Jeffrey Miron (a Cato senior fellow).

The Selgin et al. paper is largely a review of the historical literature on both the Fed and the pre-1913 U.S. monetary system. In recent years, the literature has reassessed the Fed's performance in a less favorable light. And the literature has come to view the National Banking system more favorably. The historical assessment of the Fed's performance, especially with respect to inflation, is quite damning. For even the period most favorable to the Fed, the post-World War II period, the record compared to the pre-Fed era is not favorable.

I predict this debate has only begun.

To purchase an electronic copy of their final paper from the publisher, click here; to read the Cato Working Paper draft of their paper, click here.