The Paul Volcker Myth (Money Man for Obama & Jimmy Carter)

Real Clear Markets ^ | February 05, 2008 | John Tamny

[Rodm]

If you lived through the Jimmy Carter era you will remember 10% unemployment, Fed Funds at 14% and mortgages at 18% with inflation to boot. This is Obama's Economic Adviser.

[Paul Heinzman]

Volcker's legacy as an incompetent Fed Chairman is only eclipsed by Jimmy Carter's legacy as an idiot president. They were the dastardly duo that brought us the "misery index."

And it was misery. Anyone who wants to vote for Obama, or to sit this election out because they don't like McCain's position on immigration should look no further than this endorsement.

[Tublecane]

“this despite the truth that growing economies require more money, not less.”

WRONG! Growing economies do not require more money. When the U.S. was experiencing the greatest economic expansion in the history of the world, productivity increased and prices FELL. We don’t need more money; we need more productivity. The two are not necessarily related.

[RED SOUTH]

Reagan said .. You have to produce your way out of inflation.
Too many dollars chasing too few goods and services.
He cut taxes and reduced regulation to spur invest in
jobs and factories , to produce our way out.
It worked. It is called supply side not because it means tax cuts for the rich but instead means increase the supply and tax cuts was just a means to producing more.

[RED SOUTH]

You might be shocked at how few of people understand
reaganomics because all they’ve heard over the years from liberal hacks is “ trickle down econmics “ , “tax cuts for the rich” .

[tiki]

Oh, Lord help us, that was the first time we had to re-mortgage and we were paying 19% on short term notes.

[FredZarguna]

Correct historically, but no longer monetarily possible. Because of the size of public and private debt deflation is extremely dangerous to our economy. When productivity rises it applies deflationary pressure if the money supply remains fixed (as you said, and exactly contrary to what economic illiterate Alan Greenspan believed.)

Fed policy is supposed to insure that there is neither in inflation nor deflation: that is, that the actual value of money stays fixed against productivity, which, historically has risen, which actually would require more money be printed. In practice, deflation is so dangerous that a slight degree of inflation is expected and tolerated even under the best circumstances. This absolutely requires printing more money.

[VOA]

The Paul Volcker Myth (Money Man for Obama & Jimmy Carter)

My brain nearly exploded when I heard that Obama was in meetings
with Volcker, Buffet and Robert Reuben (sp?) today.

And for years I was told these guys were capitalists.

[Paul Ross]

Their dismay is misplaced. Volcker was never on board with the Reagan economic plan in the way that modern history suggests, and rather than an essential driver of the ‘80s economic renaissance, a more realistic account of Volcker’s early years at the Fed shows that far from a facilitator of pro-growth policies, Volcker’s actions nearly derailed Reagan’s economic plan and presidency altogether.

Bump. That is my take on Volcker as well. He was a saboteur, just less overtly hostile, as David Stockman, a purported Republican ultimately proved to be....

[Paul Ross]

And for years I was told these guys were capitalists.

All you need to remember is that the MSM called George Soros and Armand Hammer that too...

I will lay you odds that the suicidal debt circle, led by their Muscovite "Todd" are likely also nothing but kindred to these guys....

[Paul Ross]

Volcker's legacy as an incompetent Fed Chairman is only eclipsed by Jimmy Carter's legacy as an idiot president. They were the dastardly duo that brought us the "misery index." And it was misery.

Agreed. It was.

The only thing good that happened was that Volcker tried so hard to make the recession worse...he inadvertantly helped Reagan kill off inflation (I am convinced if he knew it was going to work, he would have done something else to try and fail)...which was really just Raging when he got in.

[palmer]

The only thing good that happened was that Volcker tried so hard to make the recession worse...he inadvertantly helped Reagan kill off inflation

Volker killed off inflation. Reagan stepped into the financial vacuum with supply side money which was desperately needed and worked wonders. What is needed now is another Volker (or Volker himself), then another Reagan. But, we'll end up with a Nixon and another moron like Burns. Come to think of it, BERNanke - BURNs, makes sense.

[IrishCatholic]

Wasn’t this the same man who got the job of white washing the UN Oil for Food Scandal?

[fso301]

Was Volker really such a genius for raising interest rates to 20+ percent or, was it the Iran-Iraq war and resulting plunge in oil prices that broke the back of inflation?

[Moonman62]

Volcker has plenty of defenders and fans here on FR. It’s nice to see an article exposing who he really is. Volcker was also on the committee that recommended wage and price controls to Nixon.

[Moonman62]

WRONG! Growing economies do not require more money.

Only if you like a bunch of deflationary crashes.

[Moonman62]

In his most recent column, George Will continued the false legend concerning Volcker, noting that he and President Reagan whipped the inflationary dragon with contractionary economic policy that resulted in double-digit unemployment. Will’s thinking resembles that of our present Fed Chairman who labors under the retro view that growth is the cause of, not the cure for inflation.

I wish it were a retro view, but it is instead the unanimous consensus of central bankers around the world.

[Moonman62]

Volker killed off inflation.

According to the article, and the truth, Volcker did no such thing.

[palmer]

The author misses a basic point: tight money kills inflation.

[Moonman62]

Tight money kills the economy, not inflation.