Memo to the Fed: Money Matters
Author: Steve H. Hanke
Outlet: National Review
Date: May 4, 2023
Hanke's message to the Federal Reserve is the one he has pressed for decades: money matters, and the Fed refuses to look at it. Writing as regulators responded to the spring 2023 banking turmoil, he warns that new rules intended to make banks safer will instead destroy money and slow growth. Because roughly 80 percent of the broad money supply is created by commercial banks rather than the central bank, tighter capital and liquidity requirements shrink bank balance sheets and therefore shrink the money supply itself. With M2 already contracting, layering on regulatory tightening compounds the Fed's error and points toward a needless recession.
Full Citation:
"Memo to the Fed: Money Matters," National Review, May 4, 2023.