Macro Musings with David Beckworth Jeffrey Lacker on the History of Fed Credit Policy and the Four Doctrines of Fed Lending
16 snips
Dec 9, 2024 Jeffrey Lacker, a senior scholar at the Mercatus Center and former president of the Federal Reserve Bank of Richmond, dives into the evolution of the Fed's credit policy. He reflects on the Shadow Open Market Committee's role and insights from a recent conference. Lacker discusses the shifts in monetary policy frameworks, including inflation targeting changes. He explores the implications of helicopter drops for fiscal policy and the evolution of the Fed's role as a lender of last resort, especially during financial crises.
AI Snips
Chapters
Books
Transcript
Episode notes
SOMC's Inflation Focus
- The Shadow Open Market Committee (SOMC), founded in 1973, provided public insights on inflation and the Fed's role.
- Its goal was to emphasize the central bank's responsibility for controlling inflation, especially after the gold standard ended.
SOMC's Influence
- Jeffrey Lacker followed the SOMC's work, finding their commentary valuable, especially their emphasis on the Fed's role in inflation.
- He acknowledges their focus on monetary aggregate targeting persisted longer than its relevance.
Goodfriend's Credit Accord
- Marvin Goodfriend, an SOMC member, advocated for separating Fed credit interventions from monetary policy.
- He proposed a 'credit accord,' giving the Treasury responsibility for credit interventions and the Fed an inflation target.
