Monetary Policy


By encouraging business cycles and other factors that hinder the price system from accurately representing the underlying scarcity of different products and services, irresponsible monetary policy can threaten prosperity. Such detrimental distortions are limited by prudent monetary policy. In a fiat monetary system, this is accomplished by giving the central bank the overriding task of preserving a steady and predictable level of general consumer expenditure while shielding it from political temptation to pursue other, incongruous goals. However, monetary authorities should also give people the freedom to use unofficial alternatives to official fiat currency in a free society that values competition, consumer choice, and innovation. If the official monetary standard is to prevail, it should do so because it is well-managed and not because alternatives have been suppressed.

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