The FOMC lacks systematic procedures for learning from experience what monetary policies have stabilized the economy and what monetary policies have destabilized it. Standard Fed narrative prevents such learning by assuming that all adverse outcomes arise from external shocks, which the Fed...

The monetary standard emerges out of the interaction of monetary policy with the structure of the economy. Characterization of the monetary standard thus requires specification of a model of the economy with a central bank reaction function. Such a specification raises all the fundamental issues...

An intellectual consensus over how central banks control inflation has not accompanied the broad public consensus that central banks should control inflation. Because of their monopoly over monetary base creation, there has long been a tradition associating the control of inflation with the...

In his great work A History of the Federal Reserve System, vol. 1, Allan Meltzer contended that monetary policymakers in the Depression simply ignored the quantity theoretic prescriptions that would have prevented contractionary monetary policy. Practically, he was arguing that the Fed should...

The founders of the Federal Reserve desired to end financial panics. In order to achieve this end, they created a decentralized collection of reserve depositories — the Federal Reserve banks. They also wanted to remove control of the financial system from Wall Street. At the time, policymakers...

The monetary standard emerges out of the interaction of monetary policy with the structure of the economy. Characterization of the monetary standard thus requires specification of a model of the economy with a central bank reaction function. Such a specification raises all the fundamental issues...

The United States Congress created the Federal Reserve System in 1913. The System consists of the Federal Reserve Board in Washington, D.C.; 12 Federal Reserve Banks; and thousands of member commercial banks. This entry describes the evolution of the System and of monetary policy from its...

The Federal Reserve System began its intervention in the market for foreign exchange in 1962. Such intervention is undertaken at the behest of the Treasury. That year there was a spirited debate within the Federal Reserve over whether this involvement would be consistent with the Fed's...

Henry Thornton's Paper Credit of Great Britain (1802) established once and for all the notion that central banks have the prime responsibility for controlling the money stock and the price level. This theme and the analytical framework underlying it reappeared in the famous Bullion Report...