Nixon bullied his Fed chair into lowering interest rates — a political move that wrecked the economy for years.
Taking to Twitter late last month,
President Trump made clear that when it comes to the economy, the real
enemy is not in Beijing, but just down the street from the White House,
in the headquarters of the Federal Reserve. The Fed’s chairman, Jerome
Powell, had recently led his board in lowering interest rates by 25
basis points, a smaller increment than the president desired. “China is
not our problem, the Federal Reserve is,” the president wrote.
Such
audacity may feel uniquely Trumpian, but it isn’t. Though our modern
political culture holds that the Federal Reserve is independent, other
postwar presidents have bullied Fed chairmen just as egregiously.
President Lyndon Johnson pushed Fed Chairman William McChesney Martin
against a wall after Martin dared to raise the discount rate half a
percentage point.
But the worst
example is President Richard Nixon’s campaign to coerce “his” Fed
chairman, Arthur Burns, into promulgating policy that guaranteed
devastating inflation. Worst, because it worked — and demonstrated that
this economically vital, supposedly apolitical agency is more vulnerable
to presidential meddling than we’d like to believe.
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Amity Shlaes is no left-wing moonbat. She is an old right conservative whose recent biography of Calvin Coolidge is sitting on my bookshelf. But what even she dares not mention, is that the world is drowning in debt and the central banks are already up to their eyeballs in money printing and aggressive manipulation of interest rates and financial markets. Their sole function at this point is to keep the bubbles inflated for as long as possible. Trump really aught to read "This Time is Different- Eight Centuries of Financial Folley" by Carmen Reinhart and Kenneth Rogoff (also on my bookshelf). I'd offer to lend him my copy, but there aren't any pictures.
End the fed!
ReplyDeleteYou avoided talking about the gold standard. If you investigate, the western world went off the gold standard to be able to engage in the endless WWI. FDR confiscated the peoples gold at $20.67/ounce, then turned around & issued paper at $35/ounce. Nixon's inflation starts when he closed the gold window.
ReplyDeleteThe Gold Standard had been dead long before Nixon. The mortal wound came with the outbreak of WWI and the realization that nations were not going to commit suicide in the name of currency stability. The effective real death came when FDR took the US off the Gold Standard in 1933 defaulting on the US debt (though only to American Citizens). The Bretton Woods system was always a pious fiction. At no point did the US abide by its terms. We were always printing as much money as we thought we needed w/o regard to the $35 oz limit. Nixon may have signed the death certificate, but the Gold Standard had been dead for decades.
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