By Thomas J. Sargent and William L. Silber

Aug. 28, 2022 12:03 pm ET

History, Federal Reserve Chairman Jerome Powell said last week in Jackson Hole, Wyo., warns against “prematurely loosening” Fed policy. Has he learned something from Arthur Burns? Burns, who led the Fed from 1970 to 1978, tightened credit to fight inflation early in the 1970s, but then failed to follow through. That contributed to the Great Inflation.

Burns, a respected economist who had been president of the National Bureau of Economic Research, had impeccable anti-inflation credentials when President Richard Nixon appointed him. He taught Milton Friedman when Friedman was an undergraduate at Rutgers University and trained future Fed Chairman Alan Greenspan, who did graduate work at Columbia. But Burns ultimately admitted that he failed to rein in the inflationary pressures when he had the opportunity to do so.