21st Century Monetary Policy

Former Federal Reserve chair Ben S. Bernanke — who also wrote the bestselling The Courage to Act — skillfully communicates the complex details of monetary policy and its recent history.

The Federal Reserve

Two theoretical values frame monetary policy decisions. First, the “natural rate of unemployment” is a jobless level that economists believe is the minimum or ideal rate at which an economy can function. Aiming for unemployment below this rate through monetary stimulus proves unsustainable. Stimulus would cause inflation, because aggregate demand would exceed supply capacity. The “neutral rate of interest” is the rate that economists believe will theoretically neither expand nor contract the economy.