Bad Argument for the Fed
By David Henderson
In a recent Slate article critical of returning to the gold standard, Christopher Beam writes:
The creation of the Federal Reserve in 1913 didn’t stop fiscal crises, of course, but it did a lot to reduce their damage.
I’m not sure what Mr. Beam means by “fiscal crises,” but shouldn’t he count the Great Depression as a pretty important failure of the Federal Reserve? His statement reminds me of General Turgidson’s line in Dr. Strangelove, when the president and his advisors are sitting around trying to figure out how to stop a renegade general from destroying the world. When the president criticizes the program they put in place to prevent just such an event from happening, Turgidson replies:
Well I don’t think it’s quite fair to condemn a whole program because of a single slip up sir.