economics study

Topics: Federal Reserve System, Monetary policy, Central bank Pages: 247 (79499 words) Published: July 8, 2014
A XILROD

economics

Inside the Fed
MONETARY POLICY AND ITS MANAGEMENT,
MARTIN THROUGH GREENSPAN TO BERNANKE

“An intimate account of the Fed’s depressing decline in the seventies and dramatic comeback in the Volcker years
when the central bank triumphed over the biggest threat to
the U.S. economy since the Great Depression. Now that the
old enemy, stagflation, is stirring once more, the lessons
Stephen Axilrod draws from past battles couldn’t be timelier.” Sylvia Nasar, author of A Beautiful Mind

“Stephen Axilrod’s aptly titled book is, indeed, the ultimate Federal Reserve insider’s account. Leaving aside only the
five chairmen under whom he served, no one played a
greater role in shaping U.S. monetary policy during these
turbulent years or had a closer view of how the policy was
made. And, true to the author, Axilrod’s book is full of plain common sense about central banking, economic policy, and
much beyond. No one seriously interested in American
monetary policy in the post–World War II era can ignore what Axilrod recounts here.”
Benjamin M. Friedman, William Joseph Maier Professor of
Political Economy, Harvard University

Front cover photo © Joseph Sohm/Visions of America/Corbis

THE MIT PRESS MASSACHUSETTS INSTITUTE OF TECHNOLOGY CAMBRIDGE, MASSACHUSETTS 02142 HTTP://MITPRESS.MIT.EDU

Inside the Fed
MONETARY POLICY AND ITS MANAGEMENT,
MARTIN THROUGH GREENSPAN TO BERNANKE

S TEPHEN H. A XILROD

Stephen Axilrod is the ultimate Federal Reserve insider. He
worked at the Fed’s Board of Governors for over thirty years and after that in private markets and as a consultant on
monetary policy. With Inside the Fed, he offers his unique
perspective on the inner workings of the Federal Reserve
System during the last fifty years—writing about personalities as much as policy—based on his knowledge and observations of every Fed chairman since 1951.
Axilrod’s discussion focuses on how the personalities
of the various chairmen affected their capacity for leadership. He describes, for example, Arthur Burns’s response to political pressure from the Nixon White House and Paul
Volcker’s radical shift to an anti-inflationary policy at the end of the 1970s—a transition in which Axilrod himself
played a crucial role. As for the Greenspan years, Axilrod
points to the unintended effects of the Fed’s newfound
“garrulousness” (the plethora of announcements and hints about policy intentions)—one of which was the Fed’s loss of credibility in the aftermath of the chairman’s 1996 comment about “irrational exuberance.” And Axilrod incisively outlines the problems—including the subprime mess—

inherited from Greenspan by the current chairman, Ben
Bernanke. Great leadership in monetary policy, Axilrod says, is determined not by pure economic sophistication but by
the ability to push through political and social barriers to achieve a paradigm shift in policy—and by the courage
and bureaucratic moxie to pull it off.

985002 9/23/08

978-0-262-01249-2

Inside the Fed

Stephen H. Axilrod worked from 1952 to 1986 at the Board
of Governors of the Federal Reserve System in Washington,
D.C., rising to Staff Director for Monetary and Financial
Policy and Staff Director and Secretary of the Federal Open
Market Committee, the Fed’s main monetary policy arm.
Since 1986 he has worked in private markets and as a consultant on monetary policy with foreign monetary authorities.

S T E P H E N H. A X I L R O D

Inside the Fed

Inside the Fed
Monetary Policy and Its Management, Martin
through Greenspan to Bernanke

Stephen H. Axilrod

The MIT Press
Cambridge, Massachusetts
London, England

© 2009 Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher. For information about...
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