I guess people don’t remember Jimmy Carter battling the Fed Chair over lowering interest rates?
Presidents making the Fed their whipping boy is a favorite pastime.
Politicians will always want easy money. But constant easy money creates inflation.
The Federal Reserve Board originally included two members from the Treasury Dept. The FRB has changed in size and membership over the years.
Note: Carter disagreed with Volcker, as Trump does with Powell, but he never said, “termination cannot come fast enough,” nor did his National Economic Council Director ever say that “The president and his team will continue to study [firing the Fed chair],” as Hassert did.
From Derrick Jones’ “Volcker: A Comparison of Service between Two Presidencies,” Oklahoma University
President Carter had chosen Volcker, despite the warnings from numerous advisers. They worried that putting someone so fiercely independent in control of the Fed was a bad idea,
especially so close to an election year. Carter picked Volcker anyway, showing disregard for politics in favor of what he saw as the best choice for the country.
The two men had a decent relationship until Carter realized just how detrimental Volcker’s policy was to his election campaign. On October 2, 1980, a month before the presidential election Jimmy Carter seemed to have a change of heart concerning Volcker’s steering of the economy. He spoke out against Volcker, saying the Federal Reserve put “too much of their eggs in the money supply basket.” This dramatic change in opinion came on the heels of a one-percentage point increase in the discount rate, which is the interest rate that commercial banks must pay to borrow money from the Federal Reserve When the interest rate goes up the money supply shrinks as banks borrow less. Tightening the money supply will never be popular; however, Volcker had to do what was best for the economy and not repeat Burn’s mistakes of the past. About raising the discount rate at such an inopportune time for Carter, Volcker said, “It was among the most difficult things I’ve done in my professional life. Jimmy Carter had appointed me, and I voted for him again in 1976, and would do so again in the upcoming election. But no matter what I thought or felt, there was no choice other than to increase the discount rate. I had a job to do.” As Carter’s advisers had warned, the independent and determined Volcker had inadvertently helped Reagan crush Carter in the election of 1980.