Posted on 12/09/2019 6:39:55 AM PST by Borges
Paul Volcker, the former chairman of the Federal Reserve under Presidents Carter and Reagan who later played a role in the Obama administration's response to the financial crisis of 2009, has died at the age of 92.
Multiple media outlets reported that Volcker, who raised interest rates as the Fed's chief to combat inflation, had died.
In the Obama years, Volcker reemerged to tout a rule, eventually called the Volcker rule, that put tougher constraints on big banks.
Who do you think creates inflation? When the Fed announces 3% inflation next year that’s how much profit they expect to make.
Thankfully, President Reagan knew better than what your “E school” taught you.
Depends upon the industry. My family's bread and butter was a construction company. It wasn't a recession. It was a depression.
The Fed gives their profit to the US Treasury.
One man who greatly appreciated Paul Volcker was Ronald Reagan.
No one can produce an example of Reagan criticizing Paul Volcker for strangling inflation via those ultra high interest rates because Reagan never did. It was exactly what needed to be done and Reagan supported Volcker in doing it.
A lot of freepers toss around “supply side” or “Reaganomics” without knowing anything about it other than tax cuts. One of its legs was a policy for choking off inflation, which could only be done by the Fed. And Paul Volcker delivered that in spades.
“When the Fed announces 3% inflation next year that’s how much profit they expect to make.”
I’ll be happy to burst that bubble. Any profit that the Fed earns reverts directly to the US Treasury. The Fed doesn’t earn anything, it’s not a profit making institution.
The Fed is the U.S. monetary authority and its primary role is adjusting the quantity of money in the banking system.
“Who do you think creates inflation?”
Thousands of local loan officers if their combined lending exceeds the growth of the economy.
“Inflation is always and everywhere a monetary phenomenon”, Milton Friedman. And local lending in a fractional reserve system is where the quantity of money expands.
You ever go to Cracker Barrel?
Try the peg game
You’re described on it
EGG NO RA MOOSE
You’re making claims on this forum that are easily refuted
I realize you can’t help it so it’s not your fault
Correct on all counts.
The Reagan economic boom would have never seen the light of day if the interest rates had continued to be higher than dirty dozen.
Btw
Reagan renominated Volcker to the Fed in 1983
Don’t think he hated him
My college in the South brooked no liberals in the late 70s
Maybe some Freedom Riders in the Political Science dept
Much different from today where they will eventually ban Faulkner as a racist
Do you ever make posts on FR when you aren’t drunk?
Reagan renominated Volcker in 1983.
...
It doesn’t matter who was nominated. All Fed Chairmen pretty much act the same way. They all promote the incorrect theory that economic growth and wage increases cause inflation.
Every where there is high inflation you’ll find a lot of government debt combined with damage to the supply side of the economy. Zimbabwe and Venezuela are recent examples.
Significant in the United States during the 70’s that hurt the supply side of the economy was oil industry regulation and price controls.
A lot of freepers toss around “supply side” or “Reaganomics” without knowing anything about it other than tax cuts.
...
The most important part of Reagan’s supply side economics was slashing regulations, which for some reason you didn’t mention.
It’s sad to see FReepers giving credit to a market manipulating Democrat like Volcker, rather than to Reagan who deserves the credit.
Yeh I didnt understand how the Federal Reserve works until fairly recently so why should you. You should figure it out so it won’t be a shock when Trump cuts them out of the loop.
“The most important part of Reagan’s supply side economics was slashing regulations, which for some reason you didn’t mention.”
I didn’t mention it because my focus was on Volcker’s inflation fight being one of the major legs of Reagan’s economic program, not describing Reagan’s program as a whole.
But I agree that slashing regulations may have been the most important part of Reaganomics. And it’s been a major part of Trump’s program as well, which I suspect isn’t widely known.
The cumulative damage done by regulatory excess doesn’t get the press that tax cuts do. Tax cuts affect everyone, but economy-choking regulation is mostly invisible to the public at large.
It would be nice if Rush and Hannity informed their audience about it once in awhile, but I’ve never heard them do it. I don’t know that either one of them is especially knowledgeable about such things.
The Federal Reserve Banks' 2018 estimated net income of $63.1 billion represents a decrease of $17.6 billion from 2017, primarily attributable to an increase of $12.6 billion in interest expense associated with reserve balances held by depository institutions. Net income for 2018 was derived primarily from $112.3 billion in interest income on securities acquired through open market operations--U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, and GSE debt securities. The Federal Reserve Banks had interest expense of $38.5 billion primarily associated with reserve balances held by depository institutions, and incurred interest expense of $4.6 billion on securities sold under agreement to repurchase.
https://www.federalreserve.gov/newsevents/pressreleases/other20190110a.htm
“Reagan renominated Volcker to the Fed in 1983. Don’t think he hated him”
Reagan had a lot of respect for Volcker. I dunno if that respect was reciprocated, but Reagan knew what Volcker was doing in order to kill inflation and he was willing to ride it out.
What’s a shame is that Volcker’s program of choking off inflation via high interest rates could have been done a decade earlier before all of the damage done in the ‘70s. It wasn’t anything new. Arthur Burns or William Miller before him could have done it. We got lucky with Reagan and Volcker being in agreement.
Earlier in his career Volcker had worked at Treasury while JFK was President, when Kennedy proposed his tax cut program to stimulate the economy. So Volcker was involved in both the Kennedy and Reagan programs.
But what I find curious is that I once saw Volcker say that the two programs weren’t all that similar; I believe it’s in his book “Changing Fortunes”; but I never saw him explain what the differences were.
“Yeh I didnt understand how the Federal Reserve works until fairly recently so why should you.”
Probably because his career in the world of finance required him to know.
“It doesn’t matter who was nominated. All Fed Chairmen pretty much act the same way.”
If that were true then Burns and Miller would have fought inflation in the same way that Volcker did, which they didn’t.
The prevailing Keynesian view of the 70s inflation, held by Burns and Miller, was that it was a supply shock issue. Milton Friedman’s rival monetarist argument was that inflation was an excess liquidity problem. In 1979 Volcker began implementing Friedman’s quantity of money theory and stayed with it.
“I remember, back in the mid-80s, we’d await, breathlessly, the money supply release, I think on Thursdays, because that was going to move the market. Good times.”
It was Thursdays. I would have guessed late Carter years but it was some time around then.
And those money supply releases are exactly what inspired my diligent study of all things Fed. That, and listening to the bond market commentary of the great Ed Hart.
The Bond Vigilantes ruled the day back then. Anyone who thinks that the Fed is all powerful never saw what the Bond Vigilantes could do if they didn’t like those money supply numbers.
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