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When we start to perceive that there is a problem in the market (such as monopoly, fraud or speculation), the legislature passes a law to correct it, a bureaucracy is created to interpret and enforce the new law, firms and other market participants comply, and the problem is solved. But is it? Are politicians' promises and textbooks' stories to be believed? This book examines US economic history to demonstrate how the applications of laws are uncertain, affected by changing political and economic conditions as well as by legislators' perceptions and the ability or willingness of bureaucracies to enforce laws. The two cases developed in this book revolve around William McChesney Martin, Jr., who helped apply (i) the 1930s Securities Acts as president of the New York Stock Exchange and (ii) the Federal Reserve Act in the Keynesian era unforeseen by that Act. As chairman of the New York Stock Exchange, Martin served as private regulator of firms listed on the Exchange - itself a publicly regulated entity. As chairman of the Federal Reserve, he then served as a public regulator. This book thus offers an innovative approach to understanding and examining the various issues and incentives facing each of the three parties: regulated, private regulator, and public regulator.

chapter 1 Introduction -- part Part I Fiscal policy -- chapter 2 Interests: A history of tax conflicts -- chapter 3 Ideas: The theory of stabilization policy -- chapter 4 Practice: The stability of Federal government deficits -- part Part II Monetary policy -- chapter 5 The interests and institutions of monetary policy -- chapter 6 Knowledge, advice, and monetary policy -- chapter 7 The stability of monetary policy: the Federal Reserve, The Fed's variable reputation -- part Part III Conclusion -- chapter 8 It's interests after all.

It is not generally realized how little changed monetary theory and the theory and practice of monetary policy are from the time before Keynes's General Theory. Explanations of business fluctuations by Keynes's predecessors closely resemble the current literature, notwithstanding significant changes in the economic structure and several vaunted revolutions in theory in the meantime. Monetary policy is similarly unchanged from its dominant focus on financial stability and its atheoretic responses to shocks. The ambitious attempts of Keynes and the monetarists to account for money and uncertainty have been rejected by the mainstream of their fellow economists.

Argues that the theory of Walter Bagehot (1873) that financial security could be sustained if banks took the responsibility to support the market during panics was not needed in 19th-century practices. The Bank of England did not make a commitment to unlimited support of the market. The concepts of "time inconsistency" & "moral hazard" were discussed & rejected in the 1840s & again after Bagehot's publication of Lombard Street. The Bank of England did not enlarge its reserves for decades, & even Bagehot was not sure how much reserve should be held & when it should be used. Every decade from the 1820s to the 1860s experienced a financial crisis, but there were none for the next half-century. Steps to deal with crop failures, the legalizing of joint-stock banks, the spread of large deposit banks throughout England, & the exercise of fiscal prudence & professional management by the government contributed to this stability rather than the Bank's conversion to the Bagehot rule. 27 References. L. A. Hoffman

There are many explanations of the fall in prices and production called the Great Depression of 1929–33, but this article argues that a sufficient explanation of the price fall—the Great Deflation—was the resumption of the gold convertibility of currencies at prewar parities. The value (general purchasing power) of a convertible currency must be the relative cost of producing gold and other goods, which did not change significantly between 1914 and the 1930s. Monetary and fiscal policies might have affected the timing but not the ends of the price paths that were determined by the decisions to resume.