Nightcap

  1. Hong Kong voices in American politics Hui & Shum, Diplomat
  2. Who would rather stay at home alone? Elizabeth Brina, Gulf Coast
  3. The Carolingians, the Church, & constitutions (pdf) Andrew Young, SSJ
  4. How common is democracy throughout history? David Stasavage, Aeon

Nightcap

  1. The Syrian intervention at 10 Paul Antonopoulous, antiwar.com (h/t Mark from Placerville)
  2. Pitting people against each other” (pdf) Waheed Hussain, P&PA
  3. The mythical war scare of 1983 Simon Miles, War on the Rocks
  4. History’s empire William Anthony Hay, Law & Liberty

Nightcap

  1. NATO, Russia, and bias (values vs. empirics) Rachel Epstein, Duck of Minerva
  2. Leftists loathe libertarians at DC think tank Daniel Lippman, Politico
  3. Free speech, committees, and Georgetown law Jason Brennan, 200-Proof Liberals
  4. Biden and his anti-socialist stimulus legislation Thomas Knapp, WLGC
  5. Contemplating nullification in the U.S. federation NEO, nebraskaenergyobserver

Nightcap

  1. Experiments in self-reliance (Thoreau to Texas) Jonathan Malesic, Commonweal
  2. The Aztec revival in California’s public schools Christopher Silvester, Critic
  3. Racism, Georgetown law, and Salem witch trials John McWhorter, It Bears Mentioning
  4. How Ron Paul empowered the Federal Reserve George Selgin, Alt-M

Nightcap

  1. Should international law be part of our law? (pdf) McGinnis & Somin, Stanford Law Review
  2. Are small autonomous political units economically viable? Chhay Lin Lim, NOL
  3. Institutions, machines, and complex orders Federico Sosa Valle, NOL
  4. Classical liberalism and the nation-state Edwin van de Haar, NOL

Nightcap

  1. Plague and empire in the early modern Ottoman realm Rafael Nieto-Bello, Not Even Past
  2. Racist dreams and repentant racists Irfan Khawaja, Policy of Truth
  3. Pandemic death narratives in Mexico and the U.S.A. Rafael Luévano, LA Review of Books
  4. Why I hate Shakespeare Michael Huemer, Fake Noûs

Nightcap

  1. Roman and Ottoman treasures in Algeria William Dalrymple, Financial Times
  2. Is Israel a Jewish state, or The Jewish state? Michael Koplow, Ottomans & Zionists
  3. Recovering the socialist free trade tradition Marc-William Palen, I & G Forum
  4. A Muslim woman and the sea (Algeria) Jacques Delacroix, Notes On Liberty

Nightcap

  1. Segregating identity (Amanda Gorman) Kenan Malik, Observer
  2. Toward a more global history of capitalism Andrew Liu, Spectre
  3. Geopolitics as theory: federal-republicanism (pdf) Daniel Deudney, EJIR
  4. Argentina’s alternate history María Mazzoni, Age of Revolutions

Nightcap

  1. The miseducation of America’s elites Bari Weiss, City Journal
  2. Fear, loathing, and surrealism in Russia Emina Melonic, Law & Liberty
  3. Cancelling Adam Smith Brian Micklethwait, Samizdata
  4. Artificial Intelligence and humanity Kazuo Ishiguro (interview), Wired

Nightcap

  1. In defense of Jeff Sachs, but… Branko Milanovic, globalinequality
  2. The continuing mystery of the Belt and Road Yuan Jiang, Diplomat
  3. The Silk Road and re-globalization Pechlaner & Thees, global-e
  4. The Hawley-Smoot Tariff and the Great Depression David Glasner, Uneasy Money

Nightcap

  1. Free speech is more important than ever Niall Ferguson, Quillette
  2. Is it racist to expect black kids to do real math? John McWhorter, It Bears Mentioning
  3. Revolt of the three feudatories Wikipedia
  4. War and trade in the peaceful century (pdf) Karlsson & Hedberg, EHR

Nightcap

  1. Paul Krugman and public urination Irfan Khawaja, Policy of Truth
  2. Federal-republican earth constitutions (pdf) Daniel Deudney, TGSWP
  3. Right-wing folk politics Chris Shaw, Libertarian Ideal
  4. Why autocracy in Russia always fails Rodric Braithwaite, Spectator

Nightcap

  1. Cancelling Dr Seuss Jason Brennan, 200-Proof Liberals
  2. Post-socialist migration Azra Hromadžić, Fieldsites
  3. Presidential war powers Andrew Desiderio, Politico
  4. Cancelling the Muppets Paul du Quenoy, Critic

Elective Affinities in Institutional Design, 1951

[Note: this is a piece by Michalis Trepas, who you might recognize from the now-defunct NOL experiment “Be Our Guest.” Michalis is a newly-minted Notewriter, and this is the first of many more such pieces to come. -BC]

The Treasury and the Federal Reserve System have reached full accord with respect to debt-management and monetary policies to be pursued in furthering their common purpose to assure the successful financing of the Government’s requirements and, at the same time, to minimize monetization of the public debt.

– Joint announcement by the Secretary of the Treasury and the Chairman of the Board of Governors, and of the Federal Open Market Committee, of the Federal Reserve System, issued for release on Mar. 4, 1951

The Allied High Commission appreciates that these responsibilities [for the central bank] could not, without serious inconvenience, be given up so long as no legislation has been enacted establishing a competent Federal authority to assume them.

– Letter from the Allied High Commission to Chancellor Adenauer, Dated Mar. 6, 1951


A Financial Fable by Carl Barks, a short story starring Donald Duck and his duck-relatives, was published in Mar. 1951. It featured concepts like supply/ demand, money shocks, inflation and the ethics of productive labor, from a rather neoclassical perspective. Read today, it seems out of synch with the postwar paradigm of a subordinated monetary policy to the activist state and, more generally, with what came to be known as the Golden Age. As you have already probably noticed, this March also marks the 70th anniversary of two more instances against the currents of the time. It was back then that two main traditions of central bank independence – based on political consensus and judicial (“Chevron”) deference in the case of US, based on written law and judicial review in the case of Eurozone (read: Germany) – were (re)rooted. In the following lines, I offer an outline focused on institutional interplay, instead of then usual dramatis personae

The first instance is the well-known Treasury – FED Accord. Its importance warrants a mention in nearly every institutional discussion of modern central bank independence. The FED implemented an interest rates peg – kind of capping the yield curve – in 1942, to accommodate public debt management during World War II. The details were complicated, but we can still think of it as a convenient arrangement for the Executive. The policy continued into the early 50s, with the inflationary backdrop of the Korean War leading to tensions between a demanding Executive and an increasingly resistant central bank. Shortly after the dispute became more pronounced, reaching the media, the two institutions achieved a compromise. The austere paragraph cited above ended the interest rates peg and prompted a shift of thinking within – and without – the central bank, on monetary policy and its independence of fiscal needs.

The second one is definitely more obscure, and as such deserves a little more detail. The Bank deutscher Länder (BdL) was established in 1948, in the Allied territory of occupied Germany. It integrated central banking institutions, old and new, in a decentralized fashion á la US FED. Its creation underpinned the – generally successful – double reform of that year (a currency conversion with a simultaneous abolition of price controls), which reignited free market forces (and also initiated the de facto separation of the country). The Allied Banking Commission (ABC) supervised the BdL and retained the sole right to issue direct instructions, a choice more practical than doctrinal or ideological. As the ABC gradually allowed a greater leeway to the central bank, while fending off even indirect German political interventions, the resulting institutional setting provided for a relatively independent BdL. 

In late 1950, the Occupational Authority wanted out and an orderly transfer of powers required legislation from the Federal Government. Things deadlocked around the draft of the central bank law, the degrees of centralization and independence being the thorniest issues. The letter cited above, arriving after a few months of inertia, was the catalyst for action. The renewed negotiations concluded with the “Interim Law” of 10 Aug. 1951. The reformed BdL was made independent of instructions from the Federal Government, while at the same time assuming an obligation to support government’s general economic policy – without prejudice to its monetary duties. 

This institutional arrangement was akin to what the BdL itself had pushed for, a de jure formalization of its already de facto status. Keep in mind that the central bank enjoyed a head start in terms of reputation and experience versus the Federal Government, after all. But it can also be traced to the position articulated by the free market-oriented majority in the German quasi-governmental bodies back in 1948, a unique blend of explicit independence from/ cooperation with the government. The 1951 law effectively set the blueprint for the final central bank law, the Bundesbank Act of 1957. The underlying liberal creed echoed in the written report of the Chairman of the Committee for Money and Credit of the parliament:

The security of the currency… is the highest precondition for the retention of a market economy, and hence in the final analysis that of a free constitution for society and the state… [T]he note-issuing bank must be independent of these [political bodies] and subject only to the law.

The Financial Fable was the only story featuring Disney’s characters that made it to an important history of comics book, published in 1971. Around that time, the postwar consensus on macroeconomic stabilization policy was reaching its peak. A rethinking was already underway on the tools and goals of monetary policy, taking it away from the still garbled understanding of the period. It took another decade or so for both sides of the Atlantic to recalibrate their respective monetary policies. The accompanying modern central bank independence, with its foundations set in 1951, became a more salient – and popular – aspect a bit later.