Jun 13, 2026 · 0 min · 12 segments
Bob sits down with economists Alexander Salter and Joshua Hendrickson to discuss their new paper arguing that the standard Austrian critique of the Fed while correct, is fundamentally incomplete. They…
Joshua HendricksonGuest
Alexander SalterGuest
Bob MurphyHost
So yes, you have a new paper that's under review and it covers two items that number one, it says, should we abolish the Fed? And then the second part is, can we? And so can you guys maybe just speak about what made you hit on this topic before we dive into the particulars?
Yeah, I think that the order of the questions in the title has interested a lot of people.
Because if you can't abolish the Fed for whatever reason, what's the point of considering whether you should abolish the Fed? But we deliberately went with this title to highlight the fact that the conversations that the economics profession has around the Fed as a central bank and what its role actually is, we contend, are completely different.
But the long and short is that evaluated that way, the Fed is actually really bad at its job.
And we can just make recourse to the economic history and macroeconomic statistics to show that it's really bad at its job.
But that misses the point because what we're actually doing is building this broader argument about the role of U.S. dollar denominated securities and especially government debt and the global financial system.
So when we have these conversations about whether the Fed is good at stabilizing aggregate demand or not, we're sort of whistling past the graveyard.
And people aren't talking about it this way, and we think that they should be talking about it this way because it's overlooking something important.
I just think that I guess kind of the main thing is as it relates to that international aspect is that economists have really weird arguments for why the dollar is dominant, right? Like it's always just kind of – path dependence or it's just, um, the dollar is the best alternative or, or that, you know, some remnant of Bretton woods.
And so, you know, everything just gets invoiced in dollars internationally.
So of course the dollar is sort of dominant, but what this ignores is there's this entire history beginning with the collapse of Bretton woods where, you know, the United States is really taking deliberate actions, uh, For other countries to prioritize the dollar in their reserve holdings, in their trade invoicing, in all of these other different things.
And I think that's a really important point, because if you're not aware of those arguments and you just think, oh, this is just path dependence.
Well, then, like the dollar's international role isn't all that important.
But if once you take into account that there's like these deliberate government and diplomatic actions.
to maintain or to establish and maintain you know this dollar status then that changes things a little bit because then that suggests that maybe there are some political constraints that typically get ignored
So yes, you have a new paper that's under review and it covers two items that number one, it says, should we abolish the Fed? And then the second part is, can we? And so can you guys maybe just speak about what made you hit on this topic before we dive into the particulars?
Yeah, I think that the order of the questions in the title has interested a lot of people.
Because if you can't abolish the Fed for whatever reason, what's the point of considering whether you should abolish the Fed? But we deliberately went with this title to highlight the fact that the conversations that the economics profession has around the Fed as a central bank and what its role actually is, we contend, are completely different.
But the long and short is that evaluated that way, the Fed is actually really bad at its job.
And we can just make recourse to the economic history and macroeconomic statistics to show that it's really bad at its job.
But that misses the point because what we're actually doing is building this broader argument about the role of U.S. dollar denominated securities and especially government debt and the global financial system.
So when we have these conversations about whether the Fed is good at stabilizing aggregate demand or not, we're sort of whistling past the graveyard.
And people aren't talking about it this way, and we think that they should be talking about it this way because it's overlooking something important.
I just think that I guess kind of the main thing is as it relates to that international aspect is that economists have really weird arguments for why the dollar is dominant, right? Like it's always just kind of – path dependence or it's just, um, the dollar is the best alternative or, or that, you know, some remnant of Bretton woods.
And so, you know, everything just gets invoiced in dollars internationally.
So of course the dollar is sort of dominant, but what this ignores is there's this entire history beginning with the collapse of Bretton woods where, you know, the United States is really taking deliberate actions, uh, For other countries to prioritize the dollar in their reserve holdings, in their trade invoicing, in all of these other different things.
And I think that's a really important point, because if you're not aware of those arguments and you just think, oh, this is just path dependence.
Well, then, like the dollar's international role isn't all that important.
But if once you take into account that there's like these deliberate government and diplomatic actions.
to maintain or to establish and maintain you know this dollar status then that changes things a little bit because then that suggests that maybe there are some political constraints that typically get ignored
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