Required reading for central bankers, present and aspiring

Unfortunately Janet Yellen didn´t read it before taking over!


After an extended sojourn, Ryan Avent is back and writes a wonderful summary statement:

PROGRESS in the practice of monetary policy occurs one disaster at a time. From the depression of the 1930s economists learned that money matters, and that a contraction in the money supply can produce a painful downturn. From the inflation of the 1970s economists learned that inflation is a monetary phenomenon which can be controlled through the proper application of monetary policy. One has the sense that although the world’s present disaster is coming—slowly, fitfully—to an end, central bankers are still quite a long way away from understanding how they failed and how they might do better in the future. The most recent moves from the Bank of England and the Federal Reserve suggest that this particular revolution remains unfinished.

Monetary lessons are never learned quickly—unfortunately, since an earlier understanding of the nature of the disasters…

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