Federal Reserve in Washington, D.C. (Kevin Lamarque/Reuters)

Having spent the Obama years urging the Federal Reserve to run a tighter policy than it had been running—to raise interest rates and to engage in less quantitative easing—many conservative economic commentators are now urging it to run a looser one. The Wall Street Journal has led this shift (see, for examples, this editorial and this one).


I thought these conservatives were wrong earlier in the decade. With inflation running well below target and unemployment well above it, there was no good case for tighter money. Whether to loosen or tighten today strikes me as a closer question, and the Journal may well be right in its conclusion. (Which is not to say that all of its arguments are equally compelling. The president’s trade policy is not a good reason to change monetary policy in either direction.)

When Fed policy is less clearly off course, the more important questions concern what kind of monetary regime it should pursue. Should the Fed follow a rule or act with more discretion? Most conservatives (rightly, in my view) say it should follow a rule. But if so, which?

Presumably it should not be a rule that would make the business cycle’s ups and downs more severe. But that’s the perverse rule that the pattern of conservative advocacy over the last decade would imply. Inflation was lower and unemployment higher from 2009 through 2013, when conservatives wanted the Fed to run a tighter policy, than it is today, when many are urging a looser one.


Some of the Journal’s critics believe that partisanship explains this editorial pattern: It wants a weaker economy when a Democrat is president and a stronger one when a Republican is, and therefore calls for tight money in the first case and loose money in the second. But while political bias, especially unconscious bias, can affect even the best of us, I don’t think this explanation is correct: The Journal (along with like-minded conservatives) wanted tighter money through much of the George W. Bush administration, too, even as the deepening recession of 2008 was pulling Republicans down to a huge defeat.

Whatever the explanation for these views, they could use a rethink.