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Radicalism and Democracy in Monetary System Reform

Posted by on Tuesday, February 1, 2022 in En Banc, Responses, Volume 75.

John Crawford | 75 Vand. L. Rev. En Banc 55 (2022) |

The People’s Ledger is meant to offer “a blueprint for reform that would radically democratize access to money and control over financial flows in the nation’s economy.” Admitting that radical reform of the current system demands consideration, and that democratizing money is desirable, in this Response, I will critically evaluate the set of proposals put forward in The People’s Ledger along the dimensions of radicalism and democratization, while also suggesting reasons to embrace or reject parts of the program. What The People’s Ledger adds to prior FedAccounts proposals, and what grounds its claims to radicalism, lies first and foremost in its call for fundamental changes to how money is created. To this end, the Article proposes four “new” methods of money creation. I will suggest that two of these methods are unobjectionable but, at core, not new; that a third method is new but unadvisable; and that the fourth proposed method is new and radical, but possibly not radical enough. With respect to certain other issues The People’s Ledger addresses—shadow banking and determining the rates at which the Fed would lend to banks—I suggest that the proposal needs to be more radical. Finally, I will explore what strikes me as a deep ambiguity in The People’s Ledger with respect to what democratizing the Fed’s balance sheet means, or should mean, and its implications for the Fed’s popular legitimacy, as well as the quality of its policymaking going forward.

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John Crawford