The theory says that the central bank should help speed up the economy when it's too slow, and apply the brakes when it's getting too hot.
The problem is that when a recession (inevitably) hits, it'd be good if people had savings, social security, etc. If there were structured ways to unravel over-leveraged investments, and so on, without hurting the people.
There are a lot of people working on solving the fiscal policy issue. And apparently just as many trying to stick to their guns and boneheaded over-simplistic arguments.
Fiat money (central banking) is the cause of endemic inflation, not the cure. There was no net inflation in the US money from 1800-1914, and pretty much continual inflation since.
The whole point of central banking is to inflate the currency to provide money for the government to spend without needing to raise taxes.
Is it? I'm not so sure.
Since the interest rate is increased to account for inflation, it doesn't benefit debtors who can't just print more money to cover it (like the government does).
Bullshit.
The whole point of central banking is to provide price stability (which is predictable, stable, low ~2% inflation), that is to manage the money supply to follow the growth (or shrinking) of the economy.
https://www.bridgewater.com/big-debt-crises/Principles-For-N...
Milton Friedman writes about this in "Monetary History of the United States". He shows with graphs that the monetary stability was greater before the Fed was established (in 1914) than after. The Fed was simply unable to react as quickly as free banking did.