What do you think?
Rate this book
The Federal Reserve: A New History
An illuminating history of the Fed from its founding through the tumult of 2020.
In The Federal A New History , Robert L. Hetzel draws on more than forty years of experience as an economist in the central bank to trace the influences of the Fed on the American economy. Comparing periods in which the Fed stabilized the economy to those when it did the opposite, Hetzel tells the story of a century-long pursuit of monetary rules capable of providing for economic stability.
Recast through this lens and enriched with archival materials, Hetzel’s sweeping history offers a new understanding of the bank’s watershed moments since 1913. This includes critical accounts of the Great Depression, the Great Inflation, and the Great Recession—including how these disastrous events could have been avoided.
A critical volume for a critical moment in financial history, The Federal Reserve is an expert, sweeping account that promises to recast our understanding of the central bank in its second century.
In The Federal A New History , Robert L. Hetzel draws on more than forty years of experience as an economist in the central bank to trace the influences of the Fed on the American economy. Comparing periods in which the Fed stabilized the economy to those when it did the opposite, Hetzel tells the story of a century-long pursuit of monetary rules capable of providing for economic stability.
Recast through this lens and enriched with archival materials, Hetzel’s sweeping history offers a new understanding of the bank’s watershed moments since 1913. This includes critical accounts of the Great Depression, the Great Inflation, and the Great Recession—including how these disastrous events could have been avoided.
A critical volume for a critical moment in financial history, The Federal Reserve is an expert, sweeping account that promises to recast our understanding of the central bank in its second century.
696 pages, Hardcover
Published January 11, 2023
15 people are currently reading
222 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 3 of 3 reviews
July 31, 2023
Très intéressant afin de voir l'évolution de la Fed dans la perspective des erreurs qu'elle a commises et des défis qui entour sa capacité à apprendre.
L'auteur offre une vision monétariste de l'histoire de la FED et défend le besoin de revoir l'équilibre entre ses actions prises de façon discrétionnaires et celles à partir de règles dont il aimerait voir une place plus importante. Les règles ayant différents avantages comme de contribuer à son indépendance en réduisant la capacité du politique à voir la FED comme la solution à tous les problèmes et de créer un ancrage crédible pour le marché qui décidera de la direction des variables macroéconomiques. Ce qui permet de réduire le besoin de demander à la FED de deviner de façon discrétionnaire ce dont a besoin l'économie.
Une tâche qu'elle remplit "mal" selon l'auteur considérant que la FED n'a pas une structure qui lui permet d'apprendre de ses erreurs pour la simple et bonne raison (je simplifie) qu'elle ne peut pas faire de mal si sans son soutien la situation serait nécessairement pire.
Sa critique est assez convaincante pour faire réfléchir le lecteur, mais gagnerait à être davantage vulgarisée considérant que le livre souffre d'une montagne de répétitions qui complexifie inutilement sa lecture.
Un livre que je conseille aux passionnés et qui se lit bien en parallèle de ces deux livres :
A Monetary and Fiscal History of the United States, 1961–2021 Alan S. Blinder - qui offre une vision Keynesienne de l'histoire de la FED
&
Money and the Rule of Law Generality and Predictability in Monetary Institutions Peter J. Boettke, George Mason University, Virginia, Alexander William Salter, Texas Tech University, Daniel J. Smith, Middle Tennessee State University - Qui offre une perspective complémentaire à Hetzel, mais de façon plus digeste comme le livre est beaucoup plus court.
L'auteur offre une vision monétariste de l'histoire de la FED et défend le besoin de revoir l'équilibre entre ses actions prises de façon discrétionnaires et celles à partir de règles dont il aimerait voir une place plus importante. Les règles ayant différents avantages comme de contribuer à son indépendance en réduisant la capacité du politique à voir la FED comme la solution à tous les problèmes et de créer un ancrage crédible pour le marché qui décidera de la direction des variables macroéconomiques. Ce qui permet de réduire le besoin de demander à la FED de deviner de façon discrétionnaire ce dont a besoin l'économie.
Une tâche qu'elle remplit "mal" selon l'auteur considérant que la FED n'a pas une structure qui lui permet d'apprendre de ses erreurs pour la simple et bonne raison (je simplifie) qu'elle ne peut pas faire de mal si sans son soutien la situation serait nécessairement pire.
Sa critique est assez convaincante pour faire réfléchir le lecteur, mais gagnerait à être davantage vulgarisée considérant que le livre souffre d'une montagne de répétitions qui complexifie inutilement sa lecture.
Un livre que je conseille aux passionnés et qui se lit bien en parallèle de ces deux livres :
A Monetary and Fiscal History of the United States, 1961–2021 Alan S. Blinder - qui offre une vision Keynesienne de l'histoire de la FED
&
Money and the Rule of Law Generality and Predictability in Monetary Institutions Peter J. Boettke, George Mason University, Virginia, Alexander William Salter, Texas Tech University, Daniel J. Smith, Middle Tennessee State University - Qui offre une perspective complémentaire à Hetzel, mais de façon plus digeste comme le livre est beaucoup plus court.
July 14, 2023
This is a very theoretical historical analysis, which frankly, went a little above my head. The author is a very accomplished economist and assumes the reader understands certain terms, which I had to look up. The short version of what I understood from it is that the Fed should act proactively to contain inflation rather than letting it go up and then reacting. For the last seventy years, when it has done that, prices are stable and predictable, which benefits everyone. This is probably a great book for someone with more background in economics than I have, but for me it was a slog. I would recommend it for people who are serious about understanding monetary policy, but not for serious laymen.
Of the more detailed story Hetzel tells, there are several main points.
1. The Federal Reserve has adapted a lot in the last 110 years, but the big change was the Fed-Treasure Accord of 1951. The Treasury had asked (forced) the Fed to keep interest rates low during WWII so inflation was around 20% in 1950. The Accord stipulated that the national debt and monetary supply would be kept separate, giving the Fed back its autonomy.
2. The Fed Chairman from 1951-1970, William McChesney Martin, established something the author calls Lean Against the Wind (LAW). I wasn't clear if this was Martin's term of Hetzel's, but it means to see where the economy is going and move the other direction to keep it under control.
3. LAW takes two forms. "LAW with Credibility" is Hetzel's preferred method is more proactive in anticipating problems. The "credibility" is demonstrated that the Fed is establishing a predictable interest rate. "LAW with Tradeoffs" is allowing the economy more freedom, which exacerbates the business cycle of boom and bust. LAW with Tradeoffs waits until inflation and unemployment are rising to act.
4. Hetzel looks at different events/periods of the last seventy years and comes to the conclusion that LAW with Credibility has always been more successful, which the slight blip of the end of Martin's term, where Stagflation was beginning. With constantly improving tools for economists, Hetzel argues that the Fed has the tools necessary to maintain stability of the monetary supply and the economy.
Of the more detailed story Hetzel tells, there are several main points.
1. The Federal Reserve has adapted a lot in the last 110 years, but the big change was the Fed-Treasure Accord of 1951. The Treasury had asked (forced) the Fed to keep interest rates low during WWII so inflation was around 20% in 1950. The Accord stipulated that the national debt and monetary supply would be kept separate, giving the Fed back its autonomy.
2. The Fed Chairman from 1951-1970, William McChesney Martin, established something the author calls Lean Against the Wind (LAW). I wasn't clear if this was Martin's term of Hetzel's, but it means to see where the economy is going and move the other direction to keep it under control.
3. LAW takes two forms. "LAW with Credibility" is Hetzel's preferred method is more proactive in anticipating problems. The "credibility" is demonstrated that the Fed is establishing a predictable interest rate. "LAW with Tradeoffs" is allowing the economy more freedom, which exacerbates the business cycle of boom and bust. LAW with Tradeoffs waits until inflation and unemployment are rising to act.
4. Hetzel looks at different events/periods of the last seventy years and comes to the conclusion that LAW with Credibility has always been more successful, which the slight blip of the end of Martin's term, where Stagflation was beginning. With constantly improving tools for economists, Hetzel argues that the Fed has the tools necessary to maintain stability of the monetary supply and the economy.
January 26, 2025
Would only recommend it to people who have a background in macroeconomics and who are serious about learning a thorough history of the Fed (from the perspective of a monetarist). The book is terse and technical, although rewarding for anybody who loves central banking—like myself!
Displaying 1 - 3 of 3 reviews