Monetary policy in the 21st century: an impossible task?

Article Abstract:

The central bank might have to peg the price of its currency instead of letting its currency rate depend on the demand for base money. The minimum reserve requirement on banks has been declining partly due to the advances in technology that had given superior reserve and clearing media to commercial banks as compared to central bank deposits. The public's use of cash has also decreased with the advent of electronic commerce. As such, the central bank's power to influence interest rates, exchange rates and money supply is endangered. The only option is to make the currency convertible.

Electronic commerce, E-commerce, Powers and duties, Money supply, Bank reserves, Convertible money

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A rule to stabilize the price level

Article Abstract:

Most modern economists suggest that central banks should hit money supply targets to combat inflation and stabilize the price level, while older groups prefer the gold standard option. Besides being difficult to achieve, monetary targeting also fails to guarantee a stable price level. The gold standard is easy to operate but price level is affected by the relative price of gold. Stabilizing the price of consumer price index futures is a possible solution because future contracts incur no resource costs and their prices are linked to the prices of corresponding spot commodities.

Prices and rates, Price control, Price regulations, Consumer price indexes

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The costs of inflation and disinflation

Article Abstract:

The costs of inflation are much larger than the cost of disinflation. Costs of inflation cannot be measured and so the evidences fails to estimate 'true' cost of inflation, leading to biased estimation downwards. According to the zero-inflation school, the true cost of inflation must compensate any cost of disinflation by a larger margin than the quantitative estimates. There is rigging in quantitative rules of evidence against those claiming high inflation. There is a need to mold monetary policy toward ending inflation and establishing price-level stability.

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