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Author Wray, L. Randall
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract The so-called credit crunch of 1966 has long been recognized as the first significant postwar financial crisis, and one that required the first important intervention by the Federal Reserve Bank to prevent spread of a crisis. Thus, the events of 1966 play a significant role in Hyman P. Minsky's analysis of the early postwar transition from a "robust " financial system toward a "fragile " financial system. To some extent, 1966 proved to be the first verification of the "financial instability hypothesis " that Minsky had been developing since the late 1950s, and the events of that year would stimulate further development of his thinking. Similarly, Martin Wolfson begins his analysis of US financial crises with an examination of the 1966 crisis. However, in a recent paper, Professor Dickens argues rather persuasively that during the three-quarters of a year that preceded the "credit crunch " of 1966, there was an "intra-class " conflict over the direction of monetary policy, with the large New York banks favoring a coordinated policy of higher interest rates but lower interest rate ceilings on time deposits, while large regional banks preferred to retain the ceilings out of fear they would otherwise lose deposits to the New York banks. (Dickens 1998) Professor Dickens goes on to argue that the tight money policy was adopted as an alternative to incomes policy as a means of fighting inflation, representing a victory of Wall Street over the Administration (and, by implication, of "capital " over "labor") by confirming the independence of the Federal Reserve Bank to place price stability over full employment as the top priority. He
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study