ABSTRACT
Monetary policy was freed from the straightjacket of pegging US Treasury interest rates following the Treasury-Federal Reserve Accord in 1951. Bryan parted company with most of his colleagues on the Federal Open Market Committee during the late 1950s and into the 1960s. Bryan tried to steer policy away from focusing on interest rates and money market conditions to placing more weight on the monetary aggregates. Prior to the Treasury-Federal Reserve Accord, monetary aggregates essentially were ignored as policy operated within the confines of supporting Treasury security prices. Following the accord, the policy role of monetary aggregates expanded, though the shift was more cosmetic than real. Bryan’s strategy for getting reserves back on track was based on two key considerations. One was the possible arousal of inflationary expectations, an overarching factor in all of Bryan’s policy prescriptions. The other factor was the negative repercussion on the money market if the Fed were to increase reserves immediately and massively.
