The Cato Journal

The Cato Journal is a leading free-market public policy journal. The Cato Journal features articles discussing politics and the economy of interest to scholars and professionals but accessible to a general audience as well.

Articles from Vol. 38, No. 2, Spring-Summer

Allan H. Meltzer: A Life Well Lived
The world lost a great champion of liberty with the passing of Allan Meltzer on May 8, 2017, at the age of 89. A longtime Professor of Political Economy at Carnegie Mellon University, Allan was a prodigious worker who wrote hundreds of articles and...
Bluster Notwithstanding, China's Bargaining Position Will Weaken
The Trump administration began the year by pivoting in its stated approaches to trade with China and Mexico, backing off from threats to overhaul NAFTA, and "redefining" Chinese currency manipulation to focus on trade distortions. In an interview published...
Clashing over Commerce: A History of U.S. Trade Policy
Clashing Over Commerce: A History of U.S. Trade Policy Douglas A. Irwin Chicago: University of Chicago Press, 2017, 832 pp. During the first 16 months of Donald Trump's tumultuous presidency, the subjects of trade, tariffs, and America's role...
Demographics and Their Implications for the Economy and Policy
I thank the organizers for inviting me to speak at the Cato Institute's 35th Annual Monetary Conference. To some of us, 35 seems relatively young, but for a conference series it is a ripe old age. The series' longevity underscores the important contributions...
Exit Strategies from Monetary Expansion and Financial Repression
The world has moved into a low-interest rate trap. Since the mid-1980s, asymmetric monetary policy patterns--that is, sharp interest rate cuts during crises and hesitant interest rate increases during the post-crisis recoveries--have pushed interest...
Long-Term and Short-Term Impediments to the Rmb's Rise as a Reserve Currency
The internationalization of China's currency, the Renminbi (RMB) or yuan, has accelerated since the global financial crisis. On the one hand, die rate at which China is overtaking the United States as the largest economy in die world sped up because...
Milton Friedman and the Case for Flexible Exchange Rates and Monetary Rules
Managed currency without definite, stable, legislative rules is one of the most dangerous forms of "planning." A free enterprise economy can function only within a legal framework of rules; and no part of that framework is more important than the rules...
Normalizing Monetary Policy
The current focus of Federal Reserve policy is on "normalization" of monetary policy--that is, on increasing short-term interest rates and shrinking the size of the Fed's balance sheet. Short-term interest rates are exceptionally low, and the Fed's...
Priorities on the Path to Normalization
I was honored to serve as a governor of the Federal Reserve System during the financial crisis. The times were tough, but the institution was strong--sustained by a Fed staff that was tired and tireless, hopeful and humble, brilliant without bravado....
Progress and Promise for Monetary Policy Reforms
Today we are turning the corner on monetary policy. We will soon have a new Federal Reserve Board chairman and could, in an important sense, have an entirely new Board of Governors before too long. We are excited about what this prospective change...
Some Thoughts on International Monetary Policy Coordination
It is a pleasure to be back here at Cato and to be invited to speak once again at this annual conference. This is one of die premier ongoing monetary policy conferences, and the participants, both at the podium and in the audience, attest to its prominence....
Special Interest Politics Could Save Cash or Kill It
There has been a steady shift from paper-based payments to electronic means of payment in the United States during the last 30 years (Federal Reserve 2016). Many consumers and businesses have relied more on credit and debit cards, as well as electronic...
Statecraft and Liberal Reform in Advanced Democracies
Statecraft and Liberal Reform in Advanced Democracies Nils Karlson Cham, Switzerland: Palgrave Macmillan, 2018, 189 pp. The study of politics in the United States now follows two paths. One apes economics, seeking to climb the ladder of higher...
The Cadaver King and the Country Dentist: A True Story of Injustice in the American South
The Cadaver King and the Country Dentist: A True Story of Injustice in the American South Radley Balko and Tucker Carrington New York: Public Affairs, 2018, 416 pp. The stereotypical crime stories of the American Deep South often include openly...
The Case against Education: Why the Education System Is a Waste of Time and Money
The Case Against Education: Why the Education System Is a Waste of Time and Money Bryan Caplan Princeton, N.J.: Princeton University Press, 2018, 395 pp. Bryan Caplan is a professor of economics at George Mason University who has spent over...
The Case for a New International Monetary System
How often do we hear references to the notion that we live in a rules-based global trading system? Addressing the World Economic Forum at Davos in January 2017, British Prime Minister Theresa May praised liberalism, free trade, and globalization as...
The Costs and Benefits of Eliminating Currency
Government-issued paper currency is under fire. Proposals to eliminate it--or at least to demonetize and no longer issue large denomination notes--are prevalent (Rogoff 1998, 2016; Sands 2016). Proponents point out that paper notes--circulating bearer-bonds...
The Curse of the War on Cash
The "war on cash" refers to a set of policies, in the United States and around the world, deploying the power of government agencies to suppress the use of paper currency. The principal aim is to shift transactions to credit card and hank account media...
The Optimum Quantity of Money and the Zero Lower Bound
Since 2008, the monetary base has more than quadrupled through the Federal Reserve's quantitative easing (QE) programs, and yet inflation has shown no signs of accelerating. In fact, inflation has not even met the Fed's announced 2 percent target,...
The Slow, Uneven Rise of the Renminbi
The Chinese renminbi (RMB) has come a long way in a short period. It was only in die early 2000s that die Chinese government began the process of gradually opening up the country's capital account, allowing financial capital to flow more freely across...
Toward a Rules-Based International Monetary System
Over the past few years I have been making the case for moving toward a more rules-based international monetary system (e.g., Taylor 2013, 2014, 2015, 2016a, 2016b, 2017). In fact, I made the case over 30 years ago in Taylor (1985), and the ideas go...
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