Monetary Accord of 1951

(redirected from 1951 Accord)
Also found in: Wikipedia.

Monetary Accord of 1951

An agreement between the U.S. Treasury and the Federal Reserve that restored the Reserve's independence. During World War II, the Federal Reserve agreed to keep interest rates on Treasury bills very low in order to monetize the deficits the United States experienced because of the war effort. Following the war, the Treasury expected the Fed to keep rates low to further support the deficit. However, this caused inflation and many in the Fed wanted to raise interest rates. The Accord allowed it to do so.
References in periodicals archive ?
The Fed had to assist with federal debt finance following the 1951 Accord that freed the central bank from its subsidiary role to the U.
central bank is scholarly and comprehensive although most of the book is concerned with the years after the 1951 Accord between the Federal Reserve and the U.
The 1951 Accord freed the Fed from the pressure to monetize government debt for fiscal purposes.
Leach, presents a narrative account of the dramatic events that led to the 1951 Accord, including leaked memoranda, shrewd bond market maneuvers, and a disputed meeting with President Truman.
The 1951 Accord freed the Federal Reserve to conduct monetary policy independently to stabilize the macroeconomy.
It gained operational independence after the 1951 Accord, but lost that independence starting with William McChesney Martin in the early 1960s and especially Burns in the 1970s.
The conventional view of the 1951 Accord is incorrect.
The 1951 Accord has generated a misconception about Fed independence and established a misdirected concept of central bank independence in general for decades that emphasized de jure independence.
The 1951 Accord between the Treasury and the Federal Reserve was one of the most dramatic events in U.
1] Just as the 1951 Accord greatly improved monetary policy, an Accord for Fed credit policy established today, while fiscal concerns are still relatively small, could yield significant benefits in the future.
The 1951 Accord established the principle that monetary policy should be used to stabilize the macroeconomy, regardless of the fiscal concerns of the Treasury.
3] The elimination of the agreement between the Bank of Japan and the underwriting syndicate is evocative of the 1951 accord between the Federal Reserve and U.