FROM THE LUDWIG VON MISES INSTITUTE..READ AND LEARN

Will Central Bankers Become Central Planners? Daily Article by Robert Blumen | Posted on 7/31/2006 http://mises.org/story/2257 As if fighting inflation, smoothing out the business cycle, and saving the world from economic crises were not enough, central banks are being advised to include another objective in their mission: the purchase and management of stock portfolios. The Washington Post reports that former Treasury Secretary (and soon-to-be-former president of Harvard University) Lawrence Summers "is advising some of the world's biggest holders of US Treasury bonds that they ought to find much better ways to invest their money." Summers says that by holding large portfolios of US Treasuries, central banks are passing up more lucrative investments in the stock market. BREAK Mises explained the tendency of economic management to evolve in small and seemingly logical increments into a regime of complete central planning. The progression of central banks from their origin as repositories of gold created to bail out bankrupt fractional reserve banks into active portfolio managers perfectly illustrates the Misesean critique.