The Federal Reserve's monetary policy in the wake of the financial crisis has been predicated on three "major economic errors", according to Allan Meltzer, the US economist and historian.

Meltzer, a professor of political economy at Carnegie Mellon University, argues the Fed responded "appropriately" to the financial crisis but "continued the policy of massively expanding bank reserves long after it was required".

This, he says, was the Fed's first mistake. "With low investment in new capital