Monetary Policy and Libertarianism
The article explores the intersection of monetary policy and libertarian principles, examining how different monetary systems align with libertarian values of individual freedom and limited government. It critiques central banking and fiat money while discussing alternatives like free banking, commodity money, and cryptocurrencies as potential alignments with libertarian thought.
Background
The article explores a rift within libertarian economics: should the Federal Reserve be abolished outright, or reformed around a transparent, rule-like target? Scott Sumner is a leading "market monetarist" who argues for Nominal GDP (NGDP) targeting — stabilizing total dollar spending — as a limited-government alternative to either central banker discretion (the current system) or returning to a gold standard. The opposing libertarian camp, rooted in the Austrian School (Mises, Rothbard), sees any central bank as illegitimate and favors free banking or a commodity standard. Sumner's piece likely defends his rules-based approach against the abolitionist position, framing NGDP targeting as a way to minimize monetary policy errors without expanding state power.