They must be sure that their nation's financial infrastructure is capable of issuing, redeeming, and moving fiat-based claims safely and reliably. Allan Meltzer and three other panelists grappled with how to avoid problems similar to the Mexican peso crisis of 1995. Meltzer argued that, while the Mexican government is largely to blame for that crisis, other parties are culpable, too. The U.S. Treasury and the Federal Reserve have been 'helping' Mexico since the 1930s. Successive Mexican governments have learned that if they face a crisis, one or all of these friends will lend them money to make the immediate crisis appear less onerous.
Investors have learned that they get bailed out, so they continue to invest.
I believe that goes a long way toward explaining why Mexican policy has been erratic and undisciplined at times. He predicted that that process will probably pressure countries with high public-sector spending and regulatory burdens to liberalize their policies. Kevin Dowd of the University of Sheffield, coeditor of Money and the Nation State, made the case for the elimination of central banks and the introduction of a system of free banking. More than 200 people attended the conference, held in the Cato Institute's F. A. Hayek Auditorium. The Internet broadcast was one of the first of its kind.