Distinguished economist Michael D. Bordo argues for the importance of
monetary stability and monetary rules, offering theoretical, empirical,
and historical perspectives to support his case. He shows how the
pursuit of stable monetary policy guided by central banks following
rule-like behavior produces low and stable inflation, stable real
performance, and encourages financial stability. In contrast, he
explains how the failure to adhere to rules that produce monetary
stability will inevitably produce the dire consequences of real,
nominal, and financial instability. Bordo also examines the performance
of the Federal Reserve and he reviews the history of monetary policy
during the Great Depression.