As such, there is still no binding monetary rule, so uncertainty about future policy persists.
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Without a credible monetary rule, there is no firm anchor for the dollar.
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In the absence of convertibility into specie, there must be a monetary rule to anchor the nominal value of paper currency.
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The real focus should be on letting markets set relative prices, including interest rates, and adopting a monetary rule to protect the long-run value of money.
The lack of any monetary rule to constrain the Fed and the lack of any convertibility principle, as existed under the classical gold standard, means the Fed has a monopoly on base money (currency held by the public plus reserves), the supply of which is determined by a small group of Fed officials who presume to be able to forecast the future.
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For Friedman, lack of knowledge justified a k% monetary policy rule (Friedman (1960)).
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The reforms would mandate that the Fed follow a price rule for monetary policy.
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This could be done mainly through stronger regulation, he suggested, though he did not rule out monetary policy as a back-up option.
The Fed should be mandated to follow a price rule conducting monetary policy in accordance with sensitive market prices, such as gold and other commodities, maintaining the purchasing power of the dollar without inflation.
Indeed, the models that I have built support the use of policy rules, such as the Taylor rule for monetary policy or the automatic stabilizers for fiscal policy, which are the polar opposite of Keynesian discretion.
It pretty much violates every rule in its monetary policy handbook.
Stabilizing the dollar-euro exchange rate can only be achieved within a rule-based monetary regime, not by relying on "independent" central banks and finance ministers to coordinate monetary policy to do it.
Dr. McCallum argues that his rule suggest a policy of monetary easing when velocities are declining.
But Czekaj said Monday that the central bankers could not rule out any kind of monetary policy move ahead, according to TradeTheNews.com.
Auditing the Fed, replacing Fed monetary policy discretion with a mandatory price rule governing policy, even the gold standard, Nobel Laureate Friedreich Hayek pushed the envelope beyond all of these.
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Finally, House Republicans should pass legislation removing the discretionary monetary policy powers of the Federal Reserve, mandating it to conduct monetary policy in accordance with a price rule following market prices for gold, silver, oil and other commodities.
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If we compare the base-rule value just calculated with the actual base growth rates experienced recently, we see that the base rule calls for a slightly more expansionary monetary policy than that of the past few months.
There is a well-established relationship, called the McCallum Rule, between the growth rate of the monetary base and the growth rate of NGDP.
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Various rules have been proposed, including a price-level rule (zero inflation), an inflation target rule (2 percent inflation), a nominal GDP target, and a Taylor rule designed to control the growth of nominal income by controlling the monetary base.
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The Federal Reserve was obliging rule-based behavior that probably included making the price of gold a primary determinant in monetary policy.
Applying the McCallum Rule to the conditions of late 2008, the Fed would have targeted to increase the monetary base by 6.32% during 2009 in order to produce 5% NGDP growth.
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