BOOK REVIEW
A Monetary and Fiscal History of the United States, 1961–2021 by Alan S. Blinder 2022
About the Author
ALAN BLINDER is a professor of economics and public affairs at Princeton University and a regular columnist for the Wall Street Journal. Blinder served as a member of President Clinton’s original Council of Economic Advisers and then as Vice Chair of the Board of Governors of the Federal Reserve System in 1993–1996. Blinder has written scores of scholarly articles, and authored or co-authored 21 books, including the best-seller After the Music Stopped (2013) and Advice and Dissent (2018).
About the Book
From the New York Times bestselling author, the fascinating story of U.S. economic policy from Kennedy to Biden―filled with lessons for today
In this book, Alan Blinder, one of the world’s most influential economists and one of the field’s best writers, draws on his deep firsthand experience to provide an authoritative account of sixty years of monetary and fiscal policy in the United States. Spanning twelve presidents, from John F. Kennedy to Joe Biden, and eight Federal Reserve chairs, from William McChesney Martin to Jerome Powell, this is an insider’s story of macroeconomic policy that hasn’t been told before―one that is a pleasure to read, and as interesting as it is important.
Focusing on the most significant developments and long-term changes, Blinder traces the highs and lows of monetary and fiscal policy, which have by turns cooperated and clashed through many recessions and several long booms over the past six decades. From the fiscal policy of Kennedy’s New Frontier to Biden’s responses to the pandemic, the book takes readers through the stagflation of the 1970s, the conquest of inflation under Jimmy Carter and Paul Volcker, the rise of Reaganomics, and the bubbles of the 2000s before bringing the story up through recent events―including the financial crisis, the Great Recession, and monetary policy during COVID-19.
A lively and concise narrative that is sure to become a classic, A Monetary and Fiscal History of the United States, 1961–2021 is filled with vital lessons for anyone who wants to better understand where the economy has been―and where it might be headed.
“Alan Blinder’s extremely engaging history of the last sixty years of fiscal and monetary policy is an absolute must-read. It powerfully highlights the complex interactions between economic ideas, events, policy, and politics. Blinder’s historical insights can―and should―serve an important function in improving policy effectiveness and minimizing mistakes in today’s more uncertain and unsettled world.”―Mohamed A. El-Erian, New York Times bestselling author of The Only Game in Town and When Markets Collide
“This is the definitive history of post-1960 monetary and fiscal policy. The book crackles with artful turns of phrase and deftly weaves policy episodes with a lively account of the evolution of monetary and fiscal theory. It also includes fascinating short biographies of some of the main protagonists, including policymakers and economists.”―Robert J. Gordon, New York Times bestselling author of The Rise and Fall of American Growth
“Alan Blinder’s history of modern U.S. monetary and fiscal policy is a delightful blend of economic history, the history of economic doctrine, economic analysis, and personal insights from an inside player. Blinder’s deep knowledge and discernment are amplified by his acerbic sense of humor.”―Michael D. Bordo, author of The Historical Performance of the Federal Reserve
Summary of Introduction
Mark Twain was probably more accurate when he (allegedly) asserted that “history doesn’t repeat itself, but it often rhymes.”1 Sad to say, many economists and policy makers are not very skilled at picking up rhyming schemes.
Policy makers and their economic advisers must resist fads.
That said, this book is a work of history, not of theory, so I studiously avoid sojourns into theory for its own sake.
This two-way interaction is a natural and necessary subtheme of this book, and so is its opposite: cases in which policy makers resisted sensible ideas and academics ignored reality.
In the realm of monetary policy, where the Federal Reserve normally sets short-term interest rates and its other policy instruments independently, politics has mostly been a sidebar issue—though with some notable exceptions (e.g., Richard Nixon and Arthur Burns).
Fiscal policy decisions are made by elected politicians, though hopefully informed by facts and by sound economic thinking.
Nonetheless, no history of fiscal policy can avoid delving, sometimes deeply, into the politics of the day.
Writing a history of fiscal policy in America that ignored the politics would be leaving out of the play not just the Prince of Denmark but also Ophelia, Laertes, and Polonius.
So, you will find substantial political discussion of fiscal policy in these pages, though I emphasize the economics far more than the politics.
The other audience is the general reader who is interested in economic policy, or at least in macroeconomic policy.
How does the past shape today’s attitudes, options, and debates over monetary and fiscal policy?
This volume tells the sixty-year story of monetary and fiscal policy as those two types of stabilization policy struggled—sometimes cooperatively, sometimes combatively—to fight recessions, unemployment, and inflation in the United States.
I have also been writing about economic policy ever since I penned my first op-ed over forty years ago (Blinder 1981a).
I have served as an informal adviser to many U.S. policy makers, including several presidential candidates, for decades and intensely so as a member of President Bill Clinton’s original Council of Economic Advisers in 1993–1994.
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