Monetary policy

The marginal cost of money

At source, money is a public good provided by central banks, but public does not mean for free. This raises the natural question of how money should be priced. Under perfect competition, the price of private goods is mainly determined by their marginal cost of production. However, in the presence of a monopoly, the price … Continued

Should currencies be allowed to float freely?

Since the financial crisis set in motion the largest monetary experiments in recent history, accusations of “currency wars”, or “currency manipulation”, have been commonplace. These reflect the predominant liberal dogma, which dictates that exchange rates should be determined by market forces, with the role of central banks limited to silently observe as bystanders. Any attempt … Continued