INSTITUTIONAL EVOLUTION OF FEDERAL RESERVE HEGEMONY

Abstract

the total quantity ofmoney. The role of the gold standard, which was the dominant monetary institution of the time, was to provide automatically a rate of growth in the quantity ofbase money compatible with the rate of growth in the economy’s real output. It could notbe expected to make short-run adjustments that developed fundamentallyfrom the workings ofthe fractional reserve banking system. The creation of the Fed is viewed conventionally as a step toward a payments system with the desired characteristic of monetary elasticity, and the Fed is then assumed to have pursued forthrightly monetary-economic goals in an environment of political independence. In point of fact, this picture is at best wishful thinking. It omits several factors that led to the formation of the Federal Reserve System; itoverlooks the technical failure ofthe Fed to perform as specified in its first 20 years of existence; and it ignores the political

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 12 citations exist upstream.