Restoring The Fed's Credibility?

Published in Law & Liberty by Andrew Stuttaford.

If any central banker, both literally and figuratively, bestrode, in Shakespeare’s phrase, “the…world like a colossus,” it was the 6-foot-7 Paul Volcker.  But, perversely, the giant shadow he cast helps explain our not-so-transitory inflationary mess.

Alex Pollock offers a brisk, deft analysis of Volcker’s battle against inflation. He sets the stage with a 1979 speech by Arthur Burns, Volcker’s not quite immediate predecessor as Fed Chairman. In what Pollock describes as an “agonizing reappraisal,” Burns conceded (he could hardly do otherwise) that central banks had failed to rein in inflation. Running through his lament was an acknowledgment that the Fed had gone along with “the philosophic and political currents that were transforming American life and culture,” currents that had also swept away traditional notions of fiscal and monetary discipline.

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