Histories of the Federal Reserve have argued that up through the Great Depression it adhered to a “real bills” or “Riefler Burgess” conception of monetary policy, which caused it to focus on short-term borrowing as an indicator of the stance of monetary policy. This article argues that new institutionalist monetary theories had a substantial influence on the Federal Reserve from the beginning of the Depression and pushed the Federal Reserve to focus on reducing interest rates on long-term assets and encouraging bank investments in such assets. This article will show how these ideas caused the Federal Reserve to ignore other indicators of the tightness of monetary policy.
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Judge Glock; The “Riefler-Keynes” Doctrine and Federal Reserve Policy in the Great Depression. History of Political Economy 1 April 2019; 51 (2): 297–327. doi: https://doi.org/10.1215/00182702-7368872
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