The Monetary Policy of the Federal Reserve: A History

“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

“Hetzel… has produced a meticulous examination of monetary policy by the Federal Reserve over time under different chairpersons, with much attention given to the Volcker-Greenspan era. Recommended.” – Choice

“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.” – EH.net

“Hetzel’s book deepens our understanding… of the entire story of this important period. It deserves a place on the bookshelf of every serious student of monetary history.” – Christina D. Romer, Journal of Economic History