Ok, assuming that by some struck of luck an Austrian economist was selected as Fed Chairman (let’s also assume he accepted the position). While the Fed is not capable, in any sense of being able to let the market work as it should, what is the most likely and most beneficial course this Austrian economist could take to have the soundest monetary system (within the confines of the Fed) possible?
Here’s my ideas:
-Gradually raise the reserve requirement to 100%
-Raise the reserve requirement on checking accounst to the max allowable (14% IIRC)
-Refuse to monetize/purchase US or any other government securities.
-Gradually raise the interest-rate of the discount window to an extremely high rate to make it totally uneconomical for member banks to get loans from the Fed, effectively ending the discount window.
-Let the Federal Funds Rate fluctuate between 0% and 100% so as to guarnatee that the market chooses the rate at which banks lend towards one another.
-slowly sell all securites held by the Fed while simultaneously purchasing gold stock (the end result being gold would be the only thing on the Fed’s balance sheet that it held as an asset).
If I’m totally off base, please correct me…but, if I’m on base and I’m just missing a few things, let me know.
Let me make it clear I do not support the Fed in any light, this is merely a hypothetical question/dicussion.