Last Thursday I went to a local discussion meetup entitled 'The Future of Money', which turned out to be an MLM pitch to create a local currency that would then achieve convertability via the MLM presenter and his network of other currencies. Approximately 25 people showed up for the talk, which exceeded my expectations.
Although I should have expected a turnout like this given the difficulties in many parts of the world. When times are tough, we need a scapegoat; Monetary policy simply reminds us that someone we don't know is in charge of our money.
Throughout history, economies have swung between keeping their currencies hard (pegged to commodities like gold) or soft (where some authority prints as much money as it feels the economy needs). Both of these have major issues: when pegged to a commodity, we get more crashes because when anyone starts hoarding that commodity (say France during the Great Depression or the nouveau riche in IN/CN now), the amount of money in the economy shrinks, negatively impacting our ability to conduct day-to-day business.
When not pegged to a commodity, governments tend to over-promise and then use their ability to print money to try to paper over the damage. The people of Zimbabwe were only the most recent victims of this form of governmental neglect/abuse. Doubtless, we will see more.
The state of the art in monetary economics has three main ideas:
Each idea has its own problems: targeting anything requires timely and accurate measurements, with inflation being the less accurate and GDP being the less timely; and dual mandate requires the consistent exercise of good judgment by management.
Note that regardless of the method used, monetary policy appears only effective in slowing down an economy; its ability to push an economy forward seems quite limited. Currently, we appear to be in a situation where it is less effective. The world's economy is slowing down, and while we would like to push it forward, our centralized abilities to do so appear limited.
It is not Monetary Policy who will lead us out of our current economic woes. And so, we must look elsewhere.