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Mix-Ansicht- Monetary Hawks and Doves / Artikel mises.org, engl. - --- ELLI ---, 30.09.2002, 20:48
Monetary Hawks and Doves / Artikel mises.org, engl.
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<font face="Verdana" size="1" color="#002864">http://www.mises.org/fullstory.asp?control=1055</font>
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<font face="Arial" size="2"><font face="Verdana" color="#002864" size="5"><strong>Monetary Hawks and Doves</strong></font>
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<font size="4">By Mark Thornton</font>
[Posted September 30, 2002]
[img][/img] If
people are pro war, they are referred to as"hawks"; if they are pro
peace, they are called"doves."
Interestingly, these monikers are also used to describe viewpoints on
monetary policy, especially when it comes to members of the Federal Reserve
Board's Open Market Committee. Monetary doves tend to follow an"easy
money" policy, while hawks favor tighter monetary policy to prevent
runaway inflation.
Who are these hawks and doves? As Murray Rothbard (Free
Market, V9, N10, Oct. 1991) has observed:
<blockquote dir="ltr" style="MARGIN-RIGHT: 0px">
"It is interesting that, of the rulers of the Fed, the only ones
that seem to be worried about the inflationary nature of the system are
those Fed regional bank presidents who hail from outside the major areas of
bank cartels. The regional presidents are elected by the local bankers
themselves, the nominal owners of the Fed. Thus, the Fed presidents from top
cartel areas such as <st1:State>
<st1:place>
New York</st1:place>
</st1:State>
or <st1:City>
<st1:place>
Chicago</st1:place>
</st1:City>
, or the older financial elites from <st1:City>
<st1:place>
Philadelphia</st1:place>
</st1:City>
and <st1:City>
<st1:place>
Boston</st1:place>
</st1:City>
, tend to be pro-inflation 'doves,' whereas the relatively anti-inflation 'hawks'
within the Fed come from the periphery outside the major cartel centers: e.g.,
those from <st1:City>
<st1:place>
Minneapolis</st1:place>
</st1:City>
, <st1:City>
<st1:place>
Richmond</st1:place>
</st1:City>
, <st1:City>
<st1:place>
Cleveland</st1:place>
</st1:City>
, <st1:City>
<st1:place>
Dallas</st1:place>
</st1:City>
, or <st1:City>
<st1:place>
St. Louis</st1:place>
</st1:City>
. Surely, this constellation of forces is no coincidence."
[/i]
This same pattern dominates today. The chairman and vice chairman are both
doves. Members from <st1:State>
<st1:place>
New York</st1:place>
</st1:State>
, <st1:City>
<st1:place>
Chicago</st1:place>
</st1:City>
, and <st1:City>
<st1:place>
Philadelphia</st1:place>
</st1:City>
, along with <st1:City>
<st1:place>
Boston</st1:place>
</st1:City>
and <st1:City>
<st1:place>
Atlanta,</st1:place>
</st1:City>
are all doves. The hawks hail from monetary backwaters like <st1:City>
<st1:place>
Kansas City</st1:place>
</st1:City>
, <st1:City>
<st1:place>
Cleveland</st1:place>
</st1:City>
, <st1:City>
<st1:place>
Richmond</st1:place>
</st1:City>
, St. Louis, and Minneapolis, where we get beef and beer for the table,
cigarettes to smoke, and Post-its and Scotch tape for our offices.
Of course, there are always exceptions. Laurence Mayer (a possible
successor to Greenspan) is a member of the Fed's Board of Governors who was
appointed by <st1:City>
<st1:place>
Clinton</st1:place>
</st1:City>
, but he is widely considered to be a hawk. <font color="#000066">He
had this to say</font> on the eve of the beginning of the end of the stock
market bubble:
<blockquote dir="ltr" style="MARGIN-RIGHT: 0px">
"A final component of the strategy, in my view, should be that
policy should tighten further--above and beyond what is presumed to be
necessary to slow the economy to trend--to the extent that efforts to
stabilize the output gap fall short. For example, let us assume that growth
ultimately moves to trend but, in the interim, the continued above-trend
growth increases the output gap still further. In response, policy should
tighten incrementally, encouraging below trend-growth and hence unwinding
the further increase in the output gap."
[/i]
At the other end of the spectrum is Robert McTeer, president of the Dallas
Fed, the most openly free-market, even somewhat Austrian, district Fed in the
country. And yet McTeer, who regularly sings the praises of Frederic Bastiat,
is a screaming inflationist. Dove doesn't quite get it. He believes the New
Age propaganda that technology guarantees a high-growth, low-inflation economy
as long as the Fed keeps pumping up the money supply. His only dissenting vote
was against"tightening" in 1999 and his recent vote against keeping
rates where they are. He wanted the Fed to reduce their rates below the
current 1.75%!
Here is how McTeer describes his monetary views on his website:
<blockquote dir="ltr" style="MARGIN-RIGHT: 0px">
"So what do putting gasoline in a diesel engine and shooting
basketball on the wrong end of the court have to do with the economy and
monetary policy? I'll tell you—I still have a fear of zigging when I
should be zagging. It would be very bad to ease monetary policy just as
inflation was about to pick up. It would also be bad to tighten monetary
policy just as we're about to sink into a recession. Fortunately, most of
the time the question is whether to zig or not to zig. When you are
contemplating a zig, a zag is usually not even a consideration. It's the
same with zags. To zag or not to zag. Don't even consider zigging. But every
now and then something comes along to cloud the situation. Something that
would make the consequences of a wrong move more serious, without clarifying
what would [actually] be a wrong move."
[/i]
By current standards, McTeer is so dovish that Wall Street's biggest
inflationist, Larry Kudlow, has called on McTeer to be named the successor to
Alan Greenspan--an alarming prospect, to be sure.
In point of fact, terms like"dove" and"hawk" have
little substantive meaning when applied to the Fed. Mayer is labeled a thorough-going
hawk on TheStreet.com's Fed Scorecard, despite the fact that he has yet to
cast a dissenting vote on any of the Fed's easy-money policies that created
the boom in the first place! As Lew Rockwell noted (F<span class="686560613-30092002">ree
Market</span>, V14, N5, May 96) at the beginning of the stock market
bubble:
<blockquote dir="ltr" style="MARGIN-RIGHT: 0px">
"We can't stop these trends by new and better appointments to the
Fed. Differences among inflation 'hawks' and 'doves' are minute compared
with the overriding institutional bias toward cheaper money, interest-rate
manipulation, and brazen bailouts."
[/i]
If Lawrence Mayer and Jerry Jordon, president of the Cleveland Fed, are
complete hawks, what does that make me? What about Rothbard? In this proper
light, terms like monetary hawk and dove actually become misleading. For while
Murray Rothbard was an expert player of the board game Risk, in which
players battle one another for global military dominance, he was a completely
peaceful person, happy, friendly, and non-confrontational, except when it came
to the battle of ideas.
Thus, when you place these labels in their proper perspective, you realize
that they are being used incorrectly. A dove is peaceful and harmless,
but inflation--of which a monetary dove is said to be more
tolerant--is anything but peaceful and harmless. It is destructive and
disruptive to the economy, and the inflationary philosophy leads to what
Bastiat called"universal war."<a title href="http://www.mises.org/fullstory.asp?control=1055#_ftn1" name="_ftnref1">[1]</a>
A monetary dove should therefore be someone who is entirely against
inflation, paper money, fractional reserve banking, and the Fed. A dove at the
Fed would recommend that the federal funds rate be allowed to float, that the
discount window be closed, and the reserve requirements on checkable deposits
be raised to 100 percent.
I hate to continue this attempt to reverse the metaphors, because hawks are
such beautiful and useful birds, but here it goes:
The typical Fed manager and economic commentator would be
consider some degree of a hawk, someone who favored war on the economy,
insidious taxation, and redistribution of wealth from the lower and middle
classes to the politically connected elites, as well as international war and
class conflict. On a scale of 1 to 100, Kudlow and McTeer (who otherwise seem
like nice guys) would be close to 100, with Greenspan close behind and most of
the Fed somewhere in the 80s and 90s.
Let us hope that this latest inflationary fiasco convinces these hawks to
give peace a chance.
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Mark Thornton is a senior
fellow of the Mises Institute. Send him <font color="#000080">MAIL</font>.
See his Mises.org <font color="#000080">Articles
Archive</font> and his scholarly pieces in the <font color="#000080">QJAE</font>,
the <font color="#000080">RAE</font>,
and the <font color="#000080">JLS</font>.
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