Table of Contents

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.

Promotional Information

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

Reviews

'The Monetary Policy of the Federal Reserve: A History is a comprehensive study of the evolution of monetary policy practiced by the Federal Reserve since its founding nearly a century ago. Hetzel brings a unique perspective to this material, a monetarist point of view rooted in his U of Chicago training, but a view profoundly influenced by an understanding of monetary policy in practice acquired as a life-long policy advisor at the Federal Reserve Bank of Richmond. The story is one of a nominal anchor for monetary policy lost with the collapse of the gold standard and found after decades of monetary turbulence in the priority that the Federal Reserve puts on low inflation and in anchoring inflation expectations. Hetzel enriches the story with remarkable insights about Federal Reserve behavior and with key insights from the modern New Neoclasscial Synthesis (New Keynesian) theory of monetary policy. This is an amazing story, one that Hetzel tells in great detail and with great enthusiasm.' Marvin Goodfriend, Carnegie Mellon University 'An invaluable historical account of the history of U.S. monetary policy under the Federal Reserve System.' Robert G. King, Boston University 'Robert Hetzel's chronicle of the turning points in Federal Reserve conduct of monetary policy illuminates the problems that successive chairmen from William McChesney Martin on encountered in transforming the central bank into the modern Fed. Hetzel describes three monetary experiments beginning with a detour to the real bills doctrine, followed by decades of stop-go experience until the Paul Volcker-Alan Greenspan disinflation that ushered in a new monetary standard. Over time the Fed learned rule-like behavior that created expectations by the public of low stable inflation that is now the nominal anchor for a fiat money regime. It differentiates monetary policy as practiced before the 1980s from its practices since. Hetzel has written a path-breaking study.' Anna J. Schwartz, National Bureau of Economic Research