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 ...