Meltzer’s transformation

Allan Meltzer was one of the founding fathers of monetarism and he has always been one of my favourite economists. However, I must admit that that is no longer the case. His commentary over the last couple of years has had very little to do with monetarism. In fact most of Meltzer’s commentary reminds me of “internet Austrianism”. His latest comment in the Wall Street Journal is certainly not better, but it quite well illustrates his transformation from monetarist to crypto-Austrian. In fact I think it is too depressing even to comment on it (or link to it). However, David Glasner has a very good comment on Meltzer. I suggest you all read it.

If you want to read something Meltzer once wrote that really makes a lot of sense I suggest you take a look at this. That to me is the real Meltzer and the Meltzer I will think of when I take down one of his excellent books on monetary theory and history from my bookshelf.

Leave a comment


  1. Becky Hargrove

     /  July 11, 2012

    All the more important for market monetarists to craft a message that even the general public can readily understand! Even though we think of ‘internet Austrianism’ in recent terms it actually had a tremendous head start in the (general) public’s mind and what’s more has been spread by those who have no worry what the costs of publication might be – that gets covered by the special interests. Another reason for their present advantage is the fact that too many Democrats drifted away from a good understanding of monetary policy, in the U.S.

  2. Becky: people in a crisis analyse it according to the ideas already in their head. It takes a while before any new idea can get a look in. We are going through 1930s redux in so many ways. Keynesians shouting on the left, Austerians on the right, with the Market Monetarists representing the sensible centre being drowned out like Hawtrey and Cassel were. But they are tired traditions, so there is hope sense might prevail, eventually.

  3. Meltzer’s “A History of the Federal Reserve” has been an excellent reference source whenever I’ve needed detail beyond the data on monetary policy during a particular period — I’ve used it in blog posts a few times.

    • Evan, I completely agree – Meltzer’s History of the Fed is excellent. In fact all of his published academic works are excellent in my view. I learned a lot from reading Meltzer and that is why I am so disappointed with the kind of commentary he has been producing over the last couple of years.

  4. Benjamin Cole

     /  July 12, 2012

    Yeah, the same Meltzer who advocated monetary expansion and no tax cuts for Japan.

    Click to access a_policy_for_japanese_recovery.pdf

    I strongly suspect Meltzer, a GOP solon, just wants Obama to lose.

    That’s fine—but I would hope that patriotism would trump partisanship.

    I want the best monetary policy whoever is president.

    Look for Meltzers of the world to change their tune if Romney wins.

    • Benjamin, that might be it, but he was never outspoken partisan before so I must admit that I doubt that that is the real reason for his views. But no matter what – Meltzer has never been more wrong than he is at the moment.

  5. Lars to throw in my two cents here I think even Scott regarding Taylor and Anna Schwartz was saying that many people seem to have gotten more conservative since Obama became President.

    What further buttresses Benjamin’s theory is where so many of Meltzer’s piece are published-the Wall Street Journal editorila page, the unoffical organ of the Republican party

    Then again some people get more conservative with age-add that to the Obama Effect and you can explain a lot.

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