THE FED: Inside the Federal Reserve, the Secret Power Center that Controls the American Economy by Maxwell Newton

THE FED: Inside the Federal Reserve, the Secret Power Center that Controls the American Economy

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KIRKUS REVIEW

Abolish the Fed. Since 1970 it has been ""an engine of inflation, a profligate generator of excessive money."" Abolish the Fed. It says it will keep the growth of the money supply constant, then doesn't. Abolish the Fed. It can't be reformed; it won't reduce its power; it has no credibility. Abolish the Fed. We don't need a central bank. Financial insurance could be provided by another institution. Anyhow, money market funds have no insurance. And everybody wants out of Fed reserve requirements and other regulations. (Only bureaucrats want to extend controls.) The US, after all, didn't have a central bank until 1910. Booming Hong Kong doesn't have one today. (Or, the Fed should go into the Treasury Dept., to do-as-told.) . . . The origin of this line of argument, veterans of Fed critiques will recognize, is Nixon's appointment of Arthur Burns as chairman of the Fed, at the urging of Milton Friedman; Burns flouted monetarist precepts, the inflation rate went up, and monetarists have been steaming ever since. The two central chapters here, ""The Nixon-Ford-Burns Disaster"" and ""Burns at the Fed--a Decade of Self-Deception,"" amusingly document that disaffection. (The world st large, though, has some doubts about what-caused-what.) October 6, 1979 is another day that makes Newton apopleptic. Then the Fed announced its intention to control the money supply more deliberately, in effect acknowledging that it had previously pegged interest rates. All this is now by-the-way, however. As of July, the Fed started to relax its monetary grip, interest rates fell, the financial markets surged--and, post-election, even Newton's Treasury Dept. cynosure Beryl Sprinkel wasn't squawking. Adamant views--on very slippery matters.

Pub Date: Feb. 10th, 1983
Publisher: Times Books