2013년 3월 24일 일요일

[발췌] Learning about Policy from Federal Reserve History (Alan H. Meltzer)




excerpt 1:

In the March 1960 FOMC minutes, Malcom Bryan, president of the FRB of Atlanta, urged FOMC to control reserve growth and give more attention to the longer-term consequences of monetary actions. He pointed out that bank reserves did not increase in 1959 and fell in early 1960:
Our policy, unless greatly ameliorated, will in a matter of time, whether weeks or months, produce effects that we do not at all want. ... Monetary policy produces lagged effects. If the effects of an overdone restriction begin sooner or later to be overly evident, and are unfortunate, as I think they will be, we should not be able to plead ignorance. ... Let me also suggest, as a sort of aside, that the period we are in is one that illustrates the grave danger of the free-reserve, net-borrowed reserve concept as a guide to policy" [Board of Governors 1960: 30; quoted in Meltzer 2010a; 204]

(...)

excerpt 2:

Brief Summary of 1951-86 Actions

(...) I concentrate on inflation. 

The main monetary policy events of the 1950 were March 1951 Accord with the Treasury that permitted the Federal Reserve to raise the rates on long-term bonds above the 2.5% ceiling established in 1942 to help finance WWII. As part of the Accord, the Federal Reserve agreed to assist the Treasury in financing the debt. This was the reason for even-keel policy. it became a reason for inflationary policy.

The new chairman, William McChesney Martin Jr., negotiated the agreement for the Treasury. Martin had experience in financial markets. He was skeptical about the value of economics for monetary policy, and he claimed that he did not understand the money supply. I conclude the reason was the extremely short-run focus on the money market reflected in his use of free reserves or color, tone, and feel as main indicators. This usage hid the medium- and long-term consequences of his policy until inflation arrived.

Nevertheless, Martin maintained relatively low inflation in the 1950s. A main reason was that Presidents Truman and Eisenhower avoided large budget deficits except in recessions. President Truman raised tax tates to finance the Korean War, and the Eisenhower administration ran budget surplus in several years. By 1960, when President left office, the actual and expected inflation rate was about zero.

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