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Volcker: U.S. Economic Crisis Imminent
NewsMax.com ^ | june 10, 2005

Posted on 06/10/2005 4:32:57 AM PDT by paudio

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To: paudio
Mr. Volker has no credibility after his recent dealings with Kofi Annan.
41 posted on 06/10/2005 6:11:28 AM PDT by pointsal
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To: TXBSAFH

We're becoming a service economy. Unfortunately those service jobs are the "jobs Americans won't do" and we know what happens next.


42 posted on 06/10/2005 6:11:50 AM PDT by cripplecreek (Anyone who thinks we believe Hillary on any issue is truly a moron.)
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To: cripplecreek

I fear that as well


43 posted on 06/10/2005 6:18:36 AM PDT by TXBSAFH (One man's Linux is another man's OS/2.)
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To: pointsal
"Mr. Volker has no credibility after his recent dealings with Kofi Annan."

He has no credibility on the UN, but he was an outstanding chairman of the Fed. He took the heat for ending the inflation under Carter. I detest J. Carter, but Volker was one of his two intelligent appointments. The Cornell professor who deregulated the airline industry (Alfred Kahn) was the other.
44 posted on 06/10/2005 6:27:03 AM PDT by labard1
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To: cripplecreek

I agree.

We don't have near the manufactoring base we used to. A trade war with China would bring this country to its knees VERY fast.


45 posted on 06/10/2005 6:43:29 AM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: Moonman62
Volcker raised rates because Reagan wanted to strengthen the dollar. The devaluation of the dollar in the early 1970's was the real catalyst behind all the inflation we had (see the Bretton Woods accord). Other factors were panic by politicians which led to price controls and over regulation of the oil market.

But Reagan thought Volker went too far. There was serious talk about removing Volker by the White House and Congress. But I agree with your other points.

The real long term cure for inflation was the economic growth that resulted from Reagan's policies. That's right, economic growth is deflationary, contrary to what the central bank and politicians would have you believe. Your belief is necessary for you to allow them to micromanage the economy.

Growth is not necessarily inflationary, but large growth can be inflationary if you do not have the labor supply to support it. But in general the fed tends to be overly cautious tightening monetary policy at any signs of decent growth. Of course the fed is made up of bankers who fear inflation more than anything, which causes them to do that.

46 posted on 06/10/2005 6:56:58 AM PDT by Always Right
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To: Always Right
But Reagan thought Volker went too far. There was serious talk about removing Volker by the White House and Congress. But I agree with your other points

A fed chief will almost never do anything the president doesn't want done. Most likely he agreed to take the heat for the recession that followed in return for rewards later. They didn't have a Martha Stewart to blame then.

47 posted on 06/10/2005 7:37:23 AM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: Always Right
Taken by itself, economic growth is always deflationary, and that growth comes from prodictivity that includes labor plus technology, and the creation of new markets from investment. The government makes growth look inflationary when it adds too much money as a hidden tax, mainly to cover its own overspending.

And when it comes to bankers on the FOMC their fear isn't inflation, but taking the blame when something goes wrong, or incurring the wrath of someone more powerful than them.

48 posted on 06/10/2005 7:43:10 AM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: paudio

Hey Volker, I got some Euros I'd like to sell you :)


49 posted on 06/10/2005 7:43:38 AM PDT by NeoCaveman (June 14th Defeat a Dewine. OH-2 www.gobrinkman.com)
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To: Arkie2

Finally - a voice of sanity !


50 posted on 06/10/2005 9:11:16 AM PDT by traumer
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To: Moonman62
Actually, my question about '29 was in response to this statement:

"The only significant threat the US economy has ever faced is a federal government that grows too much, regulates too much, and taxes too much."

I don't really think one can look at the condition surrounding severe economic crises in our history and come to this conclusion.

51 posted on 06/10/2005 11:43:48 AM PDT by lugsoul
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To: paudio

He is right. Greenspan knows it too, that's why he cannot explain why his fed rate increases don't appear in the 10 year note. Greenspan keeps saying our economy is strong, the market through the 10 year says they see weakness/recession. I don't think Greenspan can figure out how to take out the housing bubble without throwing the rest of the economy into recession - all these refi's, now we have interest only mortgages inflating the bubble, we pushed the string with fiscal policy - we give Intel tax cuts and they build plants in China, and we give consumers tax cuts and they use a good portion of each to buy imported goods - doesn't leave much fiscal policy left to stimulate our own economy.

something has to give. politically, this may all fall apart and give Hillary a clear walk to the white house.


52 posted on 06/10/2005 11:48:38 AM PDT by oceanview
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To: lugsoul

Well, pick a crisis and let's go over it. Hoover gave instructions to the Federal Reserve to attack the stock market once he was elected. Of course, they gave out several warnings first over a period over months. When that happens, they turn everybody into speculators and make the problem worse, much as what Greenspan did in the late 90's. When the Fed finally nailed the stock market in 1929 interest on margin loans got as high as 60%.


53 posted on 06/10/2005 11:53:46 AM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: Arkie2
I agree with you. Volcker is a hard money Democrat who did the hard work to wring inflation out of the economy. The combination of a stable dollar and Reagan's tax cuts fueled the expansion we are still enjoying. Appointing Volcker was one of the very few things Jimmuh did right.

Ironically, the hard recession Volcker's initially high interest rates caused greatly contributed to Carter's defeat by Reagan.

Volker is an old fashioned mercantilist who thinks the balance of payments deficit matters more than IMHO it does. Greenspan and the Wall Street Journal disagree with him about that.

54 posted on 06/10/2005 11:54:12 AM PDT by colorado tanker (The People Have Spoken)
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To: redgolum

no it wouldn't. in fact, a recession in the US might not be a bad thing. before anyone overreacts, I say that because a recession here would really hurt china, because they have to import to us at an ever increasing rate to sustain themselves. a recession here would hurt our citizens somewhat, but it might be just what we need to implode all this excess productive capacity being built in china, and that economic turmoil might stir up political unrest there.


55 posted on 06/10/2005 11:55:55 AM PDT by oceanview
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To: zert_28
The Federal Government needs to cut their spending.

I can remember when that was considered a virtue around here.

56 posted on 06/10/2005 11:57:33 AM PDT by Wolfie
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To: Moonman62

Are you really going to take the position that increasing the discount rate on speculative loans caused the Depression? I presume that's what you mean by "attack the Stock Market - tell me if you mean something else.


57 posted on 06/10/2005 1:48:53 PM PDT by lugsoul
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To: lugsoul

1929 and the Great Depression are two different things, though one was the first major event that led to the other, but read my post again. The mere mention on numerous occasions that the government was going to attack the market greatly increased speculative behavior, and then the final act that led to the Crash was an act of government. They warned about it frequently and then they did it.


58 posted on 06/10/2005 4:01:26 PM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: steampower
"Is this a case of "offense is the best defense"? A, not so subtle, warning to the US to back off from any plans it has to change things at the UN, unless it wants to face an attempt to precipitate a melt down, one orchestrated by the UN itself?"

Bttt!

59 posted on 06/10/2005 4:09:38 PM PDT by monkeywrench (Deut. 27:17 Cursed be he that removeth his neighbor's landmark)
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To: Moonman62
Hmmm... So the government increasing the discount rate on margin loans led to the crash... as opposed to the speculative behavior you reference?

I guess the institution of market regulation in response to the crash has made the market more threatened, according to the theory.

Balderdash.

60 posted on 06/11/2005 5:39:19 AM PDT by lugsoul
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