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Working Paper
Managing a New Policy Framework: Paul Volcker, the St. Louis Fed, and the 1979-82 War on Inflation
In October 1979, Federal Reserve Chairman Paul Volcker persuaded his FOMC colleagues to adopt a new policy framework that i) accepted responsibility for controlling inflation and ii) implemented new operating procedures to control the growth of monetary aggregates in an effort to restore price stability. These moves were strongly supported by monetarist-oriented economists, including the leadership and staff of the Federal Reserve Bank of St. Louis. The next three years saw inflation peak and then fall sharply, but also two recessions and considerable volatility in interest rates and money ...
Journal Article
Economic History: Milton Friedman, Dissenter
At an event in 2002 in honor of Milton Friedman's 90th birthday, then-Fed chair Ben Bernanke offered him an olive branch of sorts on behalf of the Fed. "Regarding the Great Depression. You're right, we did it," Bernanke conceded. "We're very sorry. But thanks to you, we won't do it again."Bernanke's comment was an allusion to the 1963 book A Monetary History of the United States 1867-1960 by Friedman and economist Anna Schwartz, in which they argued that monetary policy led by the Fed had an enormous influence on the recessionary periods of the U.S. economy, including the Great Depression. ...