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This article provides a comprehensive history of anchor or reference currencies, exchange rate arrangements, and a new measure of foreign exchange restrictions for 194 countries and territories over 1946–2016. We find that the often cited post–Bretton Woods transition from fixed to flexible arrangements is overstated; regimes with limited flexibility remain in the majority. Even if central bankers’ communications jargon has evolved considerably in recent decades, it is apparent that many still place a large implicit weight on the exchange rate. The U.S. dollar scores as the world’s dominant anchor currency by a very large margin. By some metrics, its use is far wider today than 70 years ago. In contrast, the global role of the euro appears to have stalled. We argue that in addition to the usual safe assets story, the record accumulation of reserves since 2002 may also have to do with many countries’ desire to stabilize exchange rates in an environment of markedly reduced exchange rate restrictions or, more broadly, capital controls: an important amendment to the conventional portrayal of the macroeconomic trilemma.

This paper provides historical context for the relationship between expected and realized inflation. We begin with a discussion of early theoretical thought about how inflation expectations are formed. Then, we discuss survey- and asset- based measures of inflation expectations and assess their empirical relationship with realized inflation. Expected and realized inflation are strongly correlated over long samples, but over short samples the correlations can weaken. Lastly, to better understand the subtleties of the interaction between expected and realized inflation over short-lived but important events, we provide a narrative account of the relationship during the Great Depression of the 1930s, the Great Inflation of the 1970s, the Great Recession of 2008–2009, and the recent COVID-19 pandemic. These episodes offer compelling evidence of the importance of expectations and policy regime changes in inflation dynamics.

Safe assets play a critical role in an(y) economy. A safe asset is an asset that is (almost always) valued at face value without expensive and prolonged analysis. By design, there is no benefit to producing (private) information about its value, and this is common knowledge. Consequently, agents need not fear adverse selection when buying or selling safe assets. Safe assets can be easily used to exchange for goods or services or for another asset. These short-term safe assets can be money or money-like. A long-term safe asset can store value over time or be used as collateral. Much of human history can be written in terms of the search for and production of safe assets. But the most prevalent, privately produced short-term safe assets, bank debts, are subject to runs, and this has important implications for macroeconomics and for monetary policy.

Conventional wisdom traces the origins of the Federal Reserve's independence to the 1951 Treasury-Fed Accord. That rendition of history is inaccurate. The principal source of the Fed's monetary-policy independence is the Banking Act of 1935, which created the Fed's modern leadership structure and placed monetary-policy decisions beyond Presidential control. Congressional intent is clear in this case because the initial draft of the bill vested control of monetary policy with the President. After extensive debate, Congress amended the legislation and crafted the institutional features that enshrine the Fed's independence. The central role of the Banking Act of 1935 suggests that only an act of Congress or a Supreme Court ruling could fundamentally strengthen presidential influence over monetary policy.

I take the opportunity to elaborate and clarify the positioning theory of money in response to the critique of it provided by Geoffrey Ingham.

This title is part of UC Press's Voices Revived program, which commemorates University of California Press's mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1989.

What was the contribution of Anna Schwartz to the landmark book she co-authored with Milton Friedman, A Monetary History of the United States, 1867–1960? A close examination of archival evidence suggests three primary contributions Schwartz made to the work, and to Friedman's career more generally. The first was meeting the classic challenge of quantitative economic history: going into the field to locate and collect archival data that had been assembled for purposes unrelated to economic research, and deciding how best to use that data. Second, Schwartz had a decades-long role as technical sounding board and shaper of the statistical approach taken in the book. Schwartz's third and arguably greatest contribution was to transform A Monetary History of the United States into a compelling narrative argument that made an impact far beyond the economics profession. Together, these findings show Schwartz to be a scholar who made significant and lasting contributions to monetary economics, economic history, and the broader field of economics.

We study the pricing of foreign silver coins circulating in China during the period from 1866 to 1924. Spanish and Mexican silver dollar coins often traded at prices substantially larger than their bullion value. These premiums are associated with global economic and political conditions, proxies for Chinese political and banking uncertainty, and seasonal production cycles and market conditions for China’s export commodities. Diagnostic tests using the value of copper money and imports often confirm our interpretation. Our evidence suggests how rational currency traders, bankers, merchants, farmers and consumers sustained an informal monetary system during this era.

Writing in the June 1965 issue of theEconomic Journal, Harry G. Johnson begins with a sentence seemingly calibrated to the scale of the book he set himself to review: \"The long-awaited monetary history of the United States by Friedman and Schwartz is in every sense of the term a monumental scholarly achievement--monumental in its sheer bulk, monumental in the definitiveness of its treatment of innumerable issues, large and small . . . monumental, above all, in the theoretical and statistical effort and ingenuity that have been brought to bear on the solution of complex and subtle economic issues.\" Friedman and Schwartz marshaled massive historical data and sharp analytics to support the claim that monetary policy--steady control of the money supply--matters profoundly in the management of the nation's economy, especially in navigating serious economic fluctuations. In their influential chapter 7,The Great Contraction--which Princeton published in 1965 as a separate paperback--they address the central economic event of the century, the Depression. According to Hugh Rockoff, writing in January 1965: \"If Great Depressions could be prevented through timely actions by the monetary authority (or by a monetary rule), as Friedman and Schwartz had contended, then the case for market economies was measurably stronger.\" Milton Friedman won the Nobel Prize in Economics in 2000 for work related toA Monetary Historyas well as to his other Princeton University Press book,A Theory of the Consumption Function(1957).