Free Content Retrospectives: Economists and the Fed: Beginnings

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As usually understood, the significant debate over the founding of the Fed was between advocates of the real bills doctrine and advocates of the quantity theory of money. This understanding however conflates two different distinctions: one between the banking principle and the currency principle, and one between self-regulation and active management. It also fails to take seriously both the context of practical experience with the national banking system and the developing practical experience inside the Fed. I propose a new interpretation focused mainly on the contributions of four economists: J. Laurence Laughlin, Irving Fisher, Paul Warburg and Benjamin Strong.

Document Type: Research Article


Publication date: November 1, 2002

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  • The Journal of Economic Perspectives (JEP) attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of thinking; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession.
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