Milton Friedman on Monetary policy and the Federal Reserve
Another defect of the conduct of monetary policy through an independent central bank that has a good deal of leeway and power is the extent to which the policy is thereby made highly dependent on personalities. In studying the history of American monetary policy, I have been struck by the extraordinary importance of accidents of personality.
Should There Be an Independent Monetary Authority?
Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962), pp. 219–243; reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 205–214, p. 211 of the 1968 House reprint
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Another occasion in U.S. history which strikingly illustrates this point is our experience from 1929 to 1933. Without doubt, the most serious mistake in the history of the Reserve System was its mismanagement of monetary matters during those years.
Should There Be an Independent Monetary Authority?Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962), pp. 219–243; reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 205–214, p. 211 of the 1968 House reprintChecked against the sourceRead the originalThe first and most important lesson that history teaches about what monetary policy can do—and it is a lesson of the most profound importance—is that monetary policy can prevent money itself from being a major source of economic disturbance.
The Role of Monetary PolicyJournal article, 1968, American Economic Review 58, no. 1 (March 1968), pp. 1–17; reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 214–224, p. 221 of the 1968 House reprintChecked against the sourceRead the originalThe great contraction is tragic testimony to the power of monetary policy—not, as Keynes and so many of his contemporaries believed, evidence of its impotence.
The Role of Monetary PolicyJournal article, 1968, American Economic Review 58, no. 1 (March 1968), pp. 1–17; reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 214–224, p. 216 of the 1968 House reprintChecked against the sourceRead the original
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