The Monetary Policy of the Federal Reserve
A History

The evolution of the monetary standard from the start of the Federal Reserve through the end of the Greenspan era.

Robert L. Hetzel (Author)

9780521881326, Cambridge University Press

Hardback, published 17 March 2008

408 pages, 50 tables
23.4 x 15.6 x 2.7 cm, 0.79 kg

'The Monetary Policy of the Federal Reserve: A History by Robert Hetzel studies the evolution of monetary policy from the beginning of the Federal Reserve until the end of the Greenspan Era. The title claims the book is a history, and it is that, but it is much more. As a history, Hetzel's book details the conduct of monetary policy over nearly ninety years, and sets that conduct in the context of the intellectual and political environment of the time. As an economic synthesis, Hetzel's book views the evolution of monetary policies as a series of experiments useful for understanding fundamental issues concerning money, prices, and macroeconomic policy. The past serves as a laboratory for understanding the present. The emergence of modern monetary policy and prospects for our nation's financial future are understood by studying the learning-curve of the leaders of the Federal Reserve, the painful process of replacing the gold standard with a fiat money standard, and the recurrent monetary instability during the decades following the Second World War.' Gary Richardson, University of California in Irvine

Details the evolution of the monetary standard from the start of the Federal Reserve through the end of the Greenspan era. The book places that evolution in the context of the intellectual and political environment of the time. By understanding the fitful process of replacing a gold standard with a paper money standard, the conduct of monetary policy becomes a series of experiments useful for understanding the fundamental issues concerning money and prices. How did the recurrent monetary instability of the 20th century relate to the economic instability and to the associated political and social turbulence? After the detour in policy represented by FOMC chairmen Arthur Burns and G. William Miller, Paul Volcker and Alan Greenspan established the monetary standard originally foreshadowed by William McChesney Martin, who became chairman in 1951. The Monetary Policy of the Federal Reserve explains in a straightforward way the emergence and nature of the modern, inflation-targeting central bank.

Foreword: what is the monetary standard?
1. The pragmatic evolution of the monetary standard
2. Learning and policy ambiguity
3. From gold to fiat money
4. From World War II to the Accord
5. Martin and lean-against-the-wind
6. Inflation is a nonmonetary phenomenon
7. The start of the great inflation
8. Arthur Burns and Richard Nixon
9. Bretton Woods
10. Policy in the Ford administration
11. Carter, Burns, and Miller
12. The political economy of inflation
13. The Volcker disinflation
14. Monetary policy after the disinflation
15. Greenspan's move to price stability
16. International bailouts and moral hazard
17. Monetary policy becomes expansionary
18. Departing from the standard procedures
19. Boom and bust
20. Backing off from price stability
21. The Volcker–Greenspan regime
22. The Fed: inflation fighter or inflation creator?
23. The stop-go laboratory
24. Stop-go and interest rate inertia
25. Monetary nonneutrality in the stop-go era
26. A century of monetary experiments.

Subject Areas: Economic history [KCZ], Economics [KC], Comparative politics [JPB], African history [HBJH]