Examining the Fed's Inflation Missteps: Insights from Mickey Levy

Understanding Fed's Inflation Missteps

Mickey Levy and Michael Bordo present a thorough review of the Shadow Open Market Committee's half-century history, detailing where the Fed diverged in its approach to US monetary policy. The findings reflect a stark contrast between the committee's recommendations on monetarism and the Federal Reserve's actions.

The Role of Monetarism in US Inflation Policy

• Monetarism advocates for controlling money supply to stabilize inflation.
• Levy argues that the Fed's policies failed to address the core issues of US inflation.
• Historical analysis shows potential paths not taken by the Fed, as per the Shadow Open Market Committee.

Implications for Future Policy

1. What lessons can be derived from the Fed's approach?
2. Will monetary policy adapt to incorporate monetarist principles?
3. Levy's views provide a framework for evaluating potential future inflation scenarios.