U.S. Monetary Policy in Disarray

Networks Financial Institute Working Paper No. 2011-WP-21b

43 Pages Posted: 26 Aug 2011 Last revised: 14 Apr 2013

See all articles by John Tatom

John Tatom

Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise

Date Written: February 2013

Abstract

Monetary policy became more difficult to characterize during and after the mortgage foreclose and financial crises because of a shift to a new credit policy focused on private sector credit and that relies on traditional commercial banking strategies. The new credit policy broke the tight link that had existed between Fed credit and its effective monetary base, the monetary base that affects monetary aggregates. The Fed has adopted an exit strategy, but the discretionary powers that it followed remain in place as does a mistaken policy on the payment of interest on excess reserves.

Keywords: monetary policy, credit policy, central banking, Milton Friedman, business cycles

JEL Classification: E3, E5

Suggested Citation

Tatom, John, U.S. Monetary Policy in Disarray (February 2013). Networks Financial Institute Working Paper No. 2011-WP-21b, Available at SSRN: https://ssrn.com/abstract=1917358 or http://dx.doi.org/10.2139/ssrn.1917358

John Tatom (Contact Author)

Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise ( email )

3400 N. Charles Street
Baltimore, MD 21218
United States

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