24 November 2023

A Monetary and Fiscal History of the United States 1961‑2021

Alan Blinder
2022, Princeton University Press, 432 pages,
ISBN 9780691238388

Reviewer: Maximilian Magnacca

Alan Blinder is one of the world’s foremost economists and has grown up in that cohort of American economists who did not just define macroeconomics as we know it today, but also have been in some of the most powerful policy-making positions in the US. This includes Alan Blinder himself which makes him a perfect author, in my opinion, to write about the monetary and fiscal history of the United States picking up where Milton Friedman and Anna Schwartz stopped in their own ‘A Monetary History of the United States, 1867-1960’.

Blinder himself states in the introduction that he wrote the book to help policy-makers, academic economists, and the general public to remember the past for ‘history doesn’t repeat itself, but it often rhymes.’.  I think he achieves this goal and has written an accessible, enjoyable, fast-paced, yet accurate history of all the changes and turns that have shaped American macroeconomic policy since 1961. He does this whilst always keeping in mind both the academic developments at the time and the political developments that sometimes interlinked and sometimes diverged dramatically from academic thinking.

The book is written in a non-technical way that allows for both a cover-to-cover reading (which I did and recommend others to do), and, also, in a way that allows readers to drop in and out of the periods that interest them. All the chapters have short summaries at the end that highlight the key lessons of the chapter and often throughout the chapters there are interesting short biographies of the key players in that chapter, such as Jerome Powell, Janet Yellen, and Milton Friedman to name a few.

A key difference between Freidman and Schwartz’s book up to 1960 and Blinder’s book from 1961 onwards is the inclusion of the fiscal history and the associated integration of some of the political economy that surrounds fiscal policy. I think this only improves upon the text and provides a fuller understanding of how the US is in the macroeconomic situation and framework it is today, but this inclusion stems from the difference between Blinder’s academic school of thought (Keynesian) and Friedman and Schwartz’s (Monetarists).

Speaking more directly to the content of the book now, Blinder is able to take the reader deftly throughout the last 60 years or so of American economic history partially because he was helping to write some of it! His experience of the Council of Economic Advisors, and as Vice Chairman of the Federal Reserve during the 1990s alongside his relationships with other policy-makers, help provide some insider insight on some of the key debates of the ‘Great Moderation’ period and afterwards through the GFC up to the covid-19 pandemic. This aside, the strength of the book is how it shows the interconnections of various policy decisions and how often the context of those decisions was set up by decisions made in the decades prior and that economic history does rhyme more often than is remembered in the popular consciousness.

It is through these discussions that Blinder also highlights how little sometimes policy-making or academic economic research can impact each other both in terms of topics to study and in how to design better policy. While this is a little concerning, it does ring true and the way Blinder writes makes it seem like a call to action to do better by having economists focus on helping to answer policy-relevant questions and getting their research in front of not only their peers but also politicians.

In summary, this book has been enjoyable and there is something in it for everyone – for all types of readers from the academic to the amateur. It is full of both well-known facts and little-known facts whilst placing all the developments in context and helping debunking a few myths along the way.