What's Wrong With the Federal Reserve: What Would Restore Independence?

A New Paradigm for Monetary Policy?

“…The fundamental critique of the Fed's unorthodox policy by Allan Meltzer (2012) stresses the short-term orientation based on shaky data, reliance on the Phillips curve and disregard for money, credit and asset prices, i.e. conducting a purely discretionary policy.…”

“…If economic problems are not of a monetary nature (Meltzer 2012), there is certainly no argument for further quantitative easing. Given the situation as of today, the case for ending the period of zero interest rates becomes more and more relevant (Taylor 2013 (Kydland and Prescott 1977) and credibility as well as experience with policy give a strong warning that pure discretion will lead to uncertainty and volatility.…”

“…This is, however, not the case once the basic idea is respected that the rule should be the compass and deviations from the rule have to be explained (Meltzer 2012). The policy of the Deutsche Bundesbank was an example of such an approach.…”

Central Banking in the Crisis: Conceptual Convergence and Open Questions on Unconventional Monetary Policy

“…But it is now not really disputed, after the hard lessons learned from the crisis, that monetary dynamics might supply important information on asset price developments [Alessi and Detken 2009;Meltzer 2013]. I see also a growing consensus on the necessity of a thorough analysis of money and credit in order to facilitate the best contribution possible of the central bank to preserving financial stability: a holistic strategy contributes to protecting monetary policy from becoming in contradiction with the goal of maintaining price stability [Issing 2003].…”

Poland as an inflation nutter: The story of successful output stabilization

“…Especially that to the tentative advantages, possible costs may be apposed. Besides, to those well known in the literature and mostly advocated by Friedman (1977) that include, among others, the risks for central bank independence (Meltzer, 2013), we may add some recent ones associated with undesired consumption dispersion during financial frictions (Lee, 2014) and risks associated with quantitative easing (Hoenig, 2011) that may lead to unintended consequences (White, 2012).…”