Greetings, I if wonder anyone here would care to counter-point this argument I am having with someone on twitter.
RT @ri4dc: @AntiWacko I think you also fail to recognize the economic mess that Carter left for Reagan. #tcot / READ > http://www.huppi.com/kangaroo/L-carterreagan.htm
Myth: Carter ruined the economy; Reagan saved it.
Fact: The Federal Reserve Board was responsible for the events of the late 70s and 80s.
I’d never seen this point of view, and in my mind, it’s way off on facts and liberally interprets the data.
In my view, Tres Sec Volcker did what both Carter and Reagan policies required ... Tres Sec sets the policies of his boss ... would this be factual ?
Any assistance would be appreciated.
Ri4DC/
Here is one person’s analysis of it:
@rehabable
There’s a lot wrong with that article, it’s hard to know where to start. Perhaps the most fundamental flaw is the idea that inflation is caused by price increases. Price increases are the result not the cause of inflation.
Inflation results from the federal reserve expanding the money supply. The Fed literally creates money that did not exist before by loaning it to banks. The banks create even more money. But that’s another topic.
America has had almost continuous inflation since the federal reserve was created in 1913. Usually the rate of inflation is “low” or less than 2% per year. but in the 70s it was much greater.
In a non inflationary environment some prices go up, some go down, due to the market forces of supply and demand.
It’s true that Jimmy Carter more or less inherited high, ruinous inflation, but before appointing Volker he made it worse. Volker set out to reduce the rate of expansion of the money supply, or even shrink the money supply. As a result or reaction, the continuous increase in prices also stopped, or rather fell back to the “low rate of 2% +or-.
The oil shock, a reduction in the supply of oil imposed by OPEC caused oil prices and gasoline prices to rise. But in a non-inflationary environment, that is if the fed was not deliberately expanding the money supply, other prices would not have risen. In fact, other prices would have gone down because consumers, having spent extra for fuel would have less to spend on everything else. The sellers of everything else would have had to reduce prices due to reduced demand.