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The purpose of this paper is to propose reforms that would establish a credible framework of rules to constrain and guide emergency lending by the Federal Reserve and by fiscal authorities during a future financial crisis.

The authors propose a set of five overarching rules, informed by history, empirical evidence and theory, which would serve as the foundation on which detailed legislation should be constructed.

The authors find that the current framework governing emergency lending – including reforms to Federal Reserve lending enacted after the recent crisis – is inadequate and not credible, and that their proposed framework would constitute a credible balancing of costs and benefits.

Adequate assistance to financial institutions would be provided in systemic crises but would be limited in its form, and by the process that would govern its provision.

This framework would serve as a basis for establishing effective rules that would be credible, and that would properly balance the moral-hazard costs of emergency lending against the gains from avoiding systemic collapse of the financial system.

Charles Oscar Hardy (1884–1948) was a well-known though perhaps not leading monetary and financial economist of his time. He was and is important enough, however, to be remembered and studied a half century later (see Frank G. Steindl, Monetary Interpretations of the Great Depression, Ann Arbor, MI: University of Michigan Press, 1995; J. Ronnie Davis, The New Economics and the Old Economists, Ames, Iowa: Iowa State University Press, 1971; and Allan H. Meltzer, A History of the Federal Reserve, 1913–1951, Chicago, IL: University of Chicago Press, 2003). Educated at Ottawa University, Kansas (AB, 1904) (a private university affiliated with the Baptist Denomination) and the University of Chicago (Ph.D., 1916), he taught at both schools as well as at the University of Iowa. He was Vice President of the Federal Reserve Bank of Kansas City, had a long-term association with the Brookings Institution, and was a frequent advisor to government agencies. Working when the gold standard was in effect, he discerned instability as the likely consequence of excessive gold stocks and resultant credit expansion. An advocate of central-bank monetary management, he worried over limits to its power to create monetary stability because of shifts in the balance of trade and in long-term investment, and called for major reform of the gold standard. Subsequently, he advocated activist monetary and fiscal policy. Hardy also contributed to the development of the theory of risk and uncertainty, a field dominated by his colleague, Frank Knight.

The focus of this paper is the economic theory of the plans for the European Monetary Union. Part 1 demonstrates that economists, bankers and policy makers know very little about monetary policy. Part 2 explains the errors of the common practice of defining money by its functions. Because any monetary policy must rest on a definition of money it seems reasonable to conclude that a flawed definition might lead to problems with monetary policy. Part 3 applies this insight to the plans for a common currency in Europe. Because of uncertainties about the timing and details of the implementation, some important considerations are necessarily speculative. They are relegated to appendices. Appendix 1 comments on the timing and authorship and responsibility for the official reports with their unspecified authors. Appendix 2 supplies some grounds for doubting the ultimate durability of the European Monetary Union focusing on reasons that are historical, economic and pragmatic. Because the entire movement is driven by politics, not economics, Appendix 3 considers some of the relevant political issues. The conclusions summarize and speculate on possible reasons for successful outcomes.

In March 2002, the Bush administration unveiled what it deems to be a “new global development compact”: the Millennium Challenge Account (MCA). This new compact builds upon the Millennium Development Goals, e.g. halving world poverty by 2015, put forward by 189 countries at the Millennium General Assembly at the United Nations in September 2000. However, and in stark contrast with the latter strategy, which is aimed at addressing human security issues, the MCA is tied to the objectives of the 2002 National Security Strategy of the United States. As such, the MCA is primarily aimed at bringing excluded states (or, “failed states”) into the bounds of disciplinary role of capital. For instance, one of the most novel, and coercive, features of this development compact is the “pre-emptive” method in which it will administer aid. Under the MCA, only countries that govern justly, invest in their people, and open their economies to foreign enterprise and entrepreneurship will qualify for funding. In what follows, I argue that while the form of the MCA represents an unabashed articulation of U.S.-led imperialism vis-à-vis the poorest regions in the South, witnessed by the growing privatization of development aid and military intervention, its content reflects the same goals and interests that underlie the proceeding development agenda (i.e. the Washington consensus), namely promoting the idea that the “only” path to increased growth and prosperity is to be found in countries’ willingness and ability to adopt policies that promote economic freedom and the rule of law.

In the conventional positive neoclassical economics, the underlying behavioral assumptions concerning government activity clearly contrast with those usually admitted for other economic agents. While the latter are assumed to seek their own private interest, although accomplishing in that way a social function, governments are assumed to have as their main objective the maximization of social welfare. Hence, the assumption that economic policies are intended to stabilize economic activity follows as a consequence. The inconsistency of this asymmetry between the treatment of government and other agents was clearly stressed by Downs (1957):

Since the late 1970s, research in accounting has been colonized by positive accounting theory (PAT) despite strong claims that it is fundamentally flawed in terms of epistemology and methodology. This paper aims to offer new insights to PAT by critically examining its basic tenets.

The paper subjects the language of the Rochester School to a deconstruction that is a transformational reading. This uncovers rhetorical operations and unveils hidden associations with other texts and ideas.

A new interpretation of the Rochester School discourse is provided. To afford scientific credibility to deregulation within the accounting field, Watts and Zimmerman used supplements and missing links to enhance the authority of PAT. They placed supplements inside their texts to provide a misleading image of PAT. These supplements rest on von Hayek's long‐term shaping blueprint to defeat apostles of the welfare state. Yet, to set PAT apart from normative theories that Watts and Zimmerman claimed were contaminated by value judgments, they made no reference in their text to the tight links between the Rochester School and the libertarian project initiated by von Hayek.

Any reading of PAT cannot present the infinite play of meaning that is possible within a text. Deconstruction involves a commitment to on‐going, eternal questioning.

The paper provides evidence of the relation between PAT and the neoliberal (libertarian) project of von Hayek. PAT is viewed as part of the institutional infrastructure and ideological apparatus that legitimates the hegemony of markets.

According to what is reported by the North America Oral History Association, oral history was established in 1948 as a modern technique for historical documentation when Columbia University historian Allan Nevins began recording the memoirs of people who had played a significant role in American public life. While working on a biography of President Grover Cleveland, Nevins found that Cleveland's associates left few of the kinds of personal records – private correspondences, diaries, and memoirs – that biographers generally rely on for their historical reconstructions. Nevins thus came up then with the idea of filling the gaps in the official records with narratives and anecdotes from living memory. Accordingly, he conducted his first interview in 1948 with New York civic leader George McAneny, and both the Columbia Oral History Research Office – the largest archival collection of oral history interviews in the world – and the contemporary oral history movement were born (Thomson, 1998).

Eugene Meyer governed the Federal Reserve Board during most of the Great Contraction. Yet his role and import are almost unknown. He was not misguided by incorrect policy indicators or the real bills doctrine; the usual explanations for the failure of monetary policy. Meyer urged the adoption of expansionary policies and created the Reconstruction Finance Corporation to assist banks, especially nonmembers. However, the diffusion of power enabled the district bank Governors to stifle his efforts, although an expansionary policy was finally adopted in 1932. His unquestioning commitment to gold and lack of operational authority are the reasons policy failed.