Bessent’s Fed Critique Misses the Big Picture: Jonathan Levin

Treasury Secretary Scott Bessent has found a scapegoat for every one of America’s economic shortcomings in the past two decades. In a pair of essays — one published in The International Economy and an abridged version in the Wall Street Journal — he blames the Fed for growing inequality, too much inflation in 2021 and 2022, the 2023 bank failures, the fiscal recklessness of the political class, and the ongoing housing affordability crisis, among other things. It’s quite a list!

As I see it, Bessent’s fundamental claim — encapsulated in the title of his piece, “The Fed’s ‘Gain of Function’ Monetary Policy” — is that ...