This work, referred to by the short title The Central Banks, is an extension of the theoretic/alternative systems approach I treat with respect to Keynes, the Keynesians (including some with a post-Keynesian flair), and Friedman ( Frazer 1994a). Although the present work can be read independently of the theoretic/alternative systems, the latter is extended to the institutions that must implement monetary and closely related policies. The alternatives find their substance in and are influenced by the traditions, approaches to operations, and practices of the central banks. In part, this is because of the encompassing nature of matters and the analytical system I associate with Friedman, and in part, it is, as I demonstrate, because the fiscal and tax policies of government are intimately entwined in one way or another with monetary policy.
To set an empirical tone and give perspective to the matters at hand, selected policy experiments on the part of the United States are reviewed early, along with parts of the alternatives at issue. I emphasize the major interconnections between the money- and credit-creating potential of central banks and the fiscal/deficit potential of government. The principal central banks I consider include, in the order of their evolution, the Bank of England, the Federal Reserve, and the Bundesbank.
Continuing effort at some historical perspective, recognizing the encompassing nature of monetary matters, and moving to the open economy with currencies, exchange rates, and balances of payments, I take up exchange- rate, reserve, and capital-flows mechanisms. Phases of the post-World War II years are sketched in reference to the International Monetary Fund, the early prospect of a super central bank, some bank operations, the closing of the gold window, freedom and sovereignty, the rise of private markets and private capital in the post-World War II context, the European Monetary System, and runs on currencies. The central banks and their roles come forward.