{"id":39663,"date":"2018-10-25T06:34:55","date_gmt":"2018-10-25T11:34:55","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39663"},"modified":"2018-10-25T06:34:55","modified_gmt":"2018-10-25T11:34:55","slug":"volcker-recalls-another-time-the-fed-was-in-the-presidents-crosshairs","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39663","title":{"rendered":"Volcker Recalls Another Time the Fed Was in the President\u2019s Crosshairs"},"content":{"rendered":"
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Volcker Recalls Another Time the Fed Was in the President\u2019s Crosshairs<\/span><\/a><\/h3>\n
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The central banker\u2019s memoir recounts an awkward encounter with Ronald Reagan.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Reagan and Volcker in the Oval Office in 1981.<\/p>\n

PHOTOGRAPHER: J. SCOTT APPLEWHITE\/AP PHOTO<\/span><\/figcaption><\/figure>\n

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Donald Trump<\/a>\u2019s repeated public criticism<\/a> of the Federal Reserve\u2019s monetary policy seems extraordinary, but he isn\u2019t the first president to oppose raising rates. Paul Volcker, 91, has had firsthand experience with this, both in Lyndon Johnson\u2019s Treasury Department and as Fed chairman during the Reagan administration, as he recalls in <\/em>Keeping at It: The Quest for Sound Money and Good Government<\/a> (Oct. 30, PublicAffairs), written with <\/em>Bloomberg Markets<\/a> Editor Christine Harper. Volcker, who was Fed chairman from 1979 to 1987, is credited with ending an era of double-digit inflation by pushing short-term rates as high as 20 percent.<\/em><\/p>\n

Later in the fall of 1965, Treasury Secretary Henry Fowler became deeply concerned about a warning he had received from Fed Chairman William McChesney Martin. The Fed planned to raise its discount rate, the rate the Fed charges banks for short-term loans, with the presumed effect of raising all market rates. Martin\u2019s clear aim was to forestall inflationary pressures as Vietnam War spending rose in an already fully employed economy. A spirited internal debate developed. The Council of Economic Advisers and the Bureau of the Budget lined up with Fowler in pleading for delay. Privately, I was sympathetic to Martin\u2019s argument and hoped to persuade the secretary into a compromise: perhaps a quarter-percentage-point increase instead of the planned half-point.<\/p>\n

The unfortunate result for me was the creation of a four-man ad hoc committee to examine the issue. The composition was odd. Although I was the Treasury\u2019s representative, I was eager to compromise. Dan Brill, the Fed\u2019s research chief, was strongly opposed to any rate hike despite his boss\u2019s view. So were, in varying degrees, representatives from the CEA and the Bureau of the Budget (now the Office of Management and Budget). Predictably, we concluded that the decision could wait until January so it could be coordinated with the new budget.<\/p>\n

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\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Volcker Recalls Another Time the Fed Was in the President\u2019s Crosshairs The central banker\u2019s memoir recounts an awkward encounter with Ronald Reagan. Reagan and Volcker in the Oval Office in 1981. PHOTOGRAPHER: J. SCOTT APPLEWHITE\/AP PHOTO Donald Trump\u2019s repeated public criticism of the Federal Reserve\u2019s monetary policy seems extraordinary, but he isn\u2019t the first president […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,122,22571,7844,303,4047,431,19283,534,5987,3098,3650,5765,10587],"class_list":["post-39663","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-central-bank","tag-christine-harper","tag-donald-trump","tag-fed","tag-fed-independence","tag-interest-rates","tag-lyndon-johnson","tag-monetary-policy","tag-paul-volcker","tag-ronald-reagan","tag-us-federal-reserve","tag-us-president","tag-william-mcchesney-martin"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39663","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39663"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39663\/revisions"}],"predecessor-version":[{"id":39664,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39663\/revisions\/39664"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39663"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39663"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39663"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}