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The Future of Central Banking: A Lesson from United States History


  • Keynote Speech by Bennett T. McCallum

    (Carnegie Mellon University and National Bureau of Economic Research (E-mail:


The United States Constitution evidently calls for monetary arrangements with a strict metallic standard-gold, silver, or bimetallic. How were these provisions overturned so as to result in today fs fiat- money arrangement with no trace of a metallic standard? A crucial step involved Supreme Court decisions after the Civil War with regard to the constitutionality of the fiat ggreenbacks h issued during the war. The reasoning expounded by the Supreme Court in these decisions relied importantly on a failure to distinguish between monetary and fiscal policy provisions. Essentially the same failure has been present in much of the recent discussion concerning the financial crisis of 2007-09.

Suggested Citation

  • Keynote Speech by Bennett T. McCallum, 2010. "The Future of Central Banking: A Lesson from United States History," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 28, pages 27-34, November.
  • Handle: RePEc:ime:imemes:v:28:y:2010:p:27-34

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    References listed on IDEAS

    1. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
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    More about this item


    Metallic standard; Fiat money; U.S. Constitution; Legal tender cases; Monetary versus fiscal policy;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations


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