George Selgin: belief

Transcript context

…Federal Reserve Act of 1935, which kind of made the Fed semi-independent, right? Yes. The Banking Act of 1935 gave the concentrated control of the Federal Reserve to bureaucrats in Washington. The good news, if you want to call it that, with that act, was that now FDR and the New Dealers, could exert a lot more influence over monetary policy. The bad news is they didn’t take any advantage of that. Marriner Eccles was appointed as . . . We now call him chair of the Fed. I think that’s when they first became known as the chair rather than the governor. He was a monetary conservative in the sense that he didn’t believe in monetary stimulus. He was a big fiscal stimulus guy, but he’s now in charge of the Fed. There was no Federal Reserve active fiscal stimulus under Eccles’s watch. If you look at Federal Reserve credit, including open market purchases, it’s a flat line. Yes, now Washington’s in charge. Yes, you don’t have to worry about getting these 12 banks to cooperate, which is like herding cats, but no effort was made to take advantage of that to pursue an expansionary monetary policy. Let’s say you’re a dictator, George, in 1932, 1933. You can do what you want, free hand. With fiscal policy, what would you have done?…

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