Wednesday, May 10, 2017
Co-Founder of the Shadow Open Market Committee Has Died
Meltzer advised the White House, U.S. Treasury, Federal Reserve Board and the International Monetary Fund during his career.
He served as an Acting Member of the Council of Economic Advisors in 1988–89 at the end of the Ronald Reagan administration.
He served on President George H.W. Bush’s Economic Policy Advisory Board from 1989 to 1990.
Together with Karl Brunner, he created the Shadow Open Market Committee: a monetarist council that criticized the Federal Open Market Committee, But it was limited criticism, not at its fundamental core.
Between 2007-2010 he served as economic advisor to the Federal Reserve Bank of New York. He did not warn in advance of the financial crisis that came during this period.
However, during the crisis, he advised then-U.S. Treasury Secretary Henry Paulson and testified four times at hearings on the Dodd-Frank legislation approved by Congress in 2010.
Meltzer also served as president of the Mont Pelerin Society for the 2012–2014 term.
To his credit, Meltzer was critical of the Federal Reserve's decision to rescue the leading bond-insurer AIG when it did so in 2008: "These disasters should be headed off early, or should be left to the marketplace to settle...I would say we ought to look at Lehman Brothers. They let Lehman Brothers fail. Within a few days, just a few days, Barclays was there buying up some of Lehman's assets."
But a year later, he flipped, "After 30 years of bailing out almost all large financial firms, the Fed made the horrendous mistake of changing its policy in the midst of a recession... Allowing Lehman to fail without warning is one of the worst blunders in Federal Reserve history..."
Meltzer opposed US adoption of a "cap and trade" scheme for carbon emissions, designed to "combat" global climate change.
Meltzer was the first ever recipient of the AEI's Irving Kristol award in 2003.
At the time of his death, Meltzer was a distinguished visiting fellow at the Hoover Institution and the Allan H. Meltzer University Professor of Political Economy at the Tepper School of Business at Carnegie Mellon University.
American Enterprise Institute
Tepper School of Business
at 12:01:00 AM