What Jerome Powell Can Learn From Arthur Burns

Through Thomas J Sargent and William L Silver

Aug. 28, 2022 12:03 p.m. ET

History, Chairman of the Federal Reserve Jerome Powell said last week in Jackson Hole, Wyo., warning of “premature easing” of Fed policy. Did he learn something from Arthur Burns? Burns, who headed the Fed from 1970 to 1978, tightened lending to fight inflation in the early 1970s, but then failed to prevail. This contributed to the Great Inflation.

Burns, a respected economist who was president of the National Bureau of Economic Research, had impeccable anti-inflation credentials as president Richard Nixons appointed him. He taught Milton Friedman when Friedman was a student at Rutgers University training the future Fed chairman Alan Greenspan, who worked at Columbia. But Burns eventually admitted he had failed to contain inflationary pressures when he had the chance.