U.S. senator and Tea Party favorite Rand Paul is not just looking beyond the usual suspects for his endorsement for Federal Reserve chairman — he’s looking beyond the grave.
Asked by Bloomberg’s Joshua Green who his ideal Fed chairman would be, the Kentucky senator said, “Hayek would be good, but he’s deceased.” Pressed by Green to name a living economist, Paul again named a dead Nobel Prize-winning libertarian, Milton Friedman. “Let’s just go with dead,” Paul explained, “because then you probably really wouldn’t have much of a functioning Federal Reserve.”
Paul is associated with hard-money views and opposition to the Fed’s control of the money supply. His father, congressman and presidential candidate Ron Paul, long campaigned against the central bank and was the author of the 2009 book “End the Fed.”
Paul’s comments about Hayek and Friedman, two of the most prominent figures in libertarian political philosophy, were facetious. But both would have been receptive to the idea of removing influence over the money supply from living people.
George Mason University economist Lawrence H. White wrote in a 2008 paper that “Hayek’s monetary policy norm in fact prescribed stabilization of nominal income.” In other words, the Fed would be run according to a simple rule that aimed at keeping nominal gross domestic product or some other statistic growing at a stable rate from year to year. That rule would minimize the discretionary power of whoever was controlling the Fed at any given time.
Friedman, known as the father of monetarists who believe that the Fed should focus solely on the growth of the money supply, went a step further and suggested that the Fed chairman should be replaced by a computer.
“We don’t need a Fed,” Milton Friedman said in a 1999 interview with Deroy Murdock. “I have, for many years, been in favor of replacing the Fed with a computer.”
If Friedman had his way, that computer “would print out a specified number of paper dollars” to conduct monetary policy. “Same number, month after month, week after week, year after year.”