The Review of Economics and Statistics Vol. 44 No. 2 1962
The Sequel to Bills Only
Abstract
W HEREVER the test of implementation Al is applied to prescriptions for policy based on a priori reasoning, the mortality rate in ideas is bound to be high. Washington, D.C. is notoriously the graveyard of fond hopes and high aspirations. It seems fair to suggest that the conventional fate has overtaken a number of the ambitions in the monetary field announced at the outset of the Kennedy administration. Generally speaking, the President's advisers came to Washington persuaded, first, that monetary policy had been too stringent during the Eisenhower years, and, second, that the Board's policy of confining open market operations to the short end represented an unnecessary f orfeiting of a powerful weapon for stabilizing the economy through alteration of the interest rate strutture. But even the first few months of power brought home the realization that the opportunity for monetary leniency, under circumstances in which domestic economic conditions warrant such a policy, is significantly, even embarrassingly, restricted by the nation's balance-of-payments position. Several of the administration's experts had earlier been concerned about the restrictive implications of the external pressures. However, they failed to recognize the full magnitude of the problem, because they did not then appreciate, what experience has since taught: how difficult it is for the Federal Open Market Committee to alter, save temporarily, the interest rate structure by purchasing securities of varying maturities. As a consequence, the nation experienced in the recent recession an unheralded degree of monetary restraint, one which would probably have been regarded as intolerable had it occurred under the previous administration. Perhaps it is wise, however, not to reflect too long on the ironies of politics, but rather, in fairness to the highly qualified men who are the President's advisers, to acknowledge how quickly the lessons have been learned.
- DOI
- 10.2307/1928200
- Volume
- 44
- Issue
- 2
- Pages
- 184
- Sources
- openalex crossref