The Federal Reserve: A New History
The Federal Reserve: A New History
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Abstract
The Federal Reserve System: A New History provides a complete history of the Federal Reserve from its founding through 2020. The historical narrative highlights the evolution of the monetary standard expressed as an ongoing succession of semi-controlled experiments that address the issue of identification. What is the origin of the disturbances that cause inflation or deflation and recessions? Do they originate in the private sector and overwhelm the stabilizing powers of the price system? Alternatively, do they originate in the destabilizing behavior of the Federal Reserve due to lack of control over money creation and the resulting instability in the behavior of prices? The evolution of the monetary standard reflects the changing understanding of Federal Reserve policy makers about the role of policy. Early real bills views reflected the belief that to prevent recession and inflation policy had to prevent speculative excess. The result was the Great Recession. William McChesney Martin, FOMC chair from 1951 until early 1970, invented lean against the wind to stabilize economic growth, but too often the Federal Reserve was slow to raise the funds rate and prevent the emergence of inflation, especially under Arthur Burns. The result was stop-go monetary policy and high inflation. FOMC chairs Paul Volcker and Alan Greenspan restored price stability. However, the Great Moderation was replaced by the Great Recession when Chair Ben Bernanke was slow to lower interest rates in fall 2008. Finally, in response to the pandemic, the Jerome Powell FOMC initiated an expansionary and ultimately inflationary monetary policy.
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Front Matter
- 1 In Search of the Monetary Standard
- 2 The Organization of the Book
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3
What Causes the Monetary Disorder That Produces Real Disorder?
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4
The Creation of the Fed
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5
Why the Fed Failed in the Depression: The 1920s Antecedents
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6
A Fiat Money Standard: Free Reserves Operating Procedures and Gold
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7
A Narrative Account of the 1920s
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8
Attacking Speculative Mania
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9
The Great Contraction: 1929–33
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10
The Roosevelt Era
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11
The Guiding Role of Governor Harrison and the NY Fed
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12
Contemporary Critics in the Depression
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13
From World War II to the 1953 Recession
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14
LAW (Lean-against-the-Wind) and Long and Variable Lags
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15
The Early Martin Fed
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16
From Price Stability to Inflation
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17
The Burns Fed
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18
Stop-Go and Collapse of a Stable Nominal Anchor
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19
The Volcker Fed and the Birth of a New Monetary Standard
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20
The Green span FOMC
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21
The Great Recession
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22
The 2008 Financial Crisis
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23
The Eurozone Crisis
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24
Recovery from the Great Recession
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25
Covid-19 and the Fed’s Credit Policy
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26
Covid-19 and the Fed’s Monetary Policy: Flexible-Average-Inflation Targeting
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27
How Can the Fed Control Inflation?
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28
Making the Monetary Standard Explicit
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29
What Is the Optimal Monetary Standard?
- 30 Why Is Learning So Hard?
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End Matter
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