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> While Volcker had used high interest rates to engineer a crushing recession at the start of Reagan’s first term, he then allowed the economy to expand rapidl
by gertef 9y ago
> While Volcker had used high interest rates to engineer a crushing recession at the start of Reagan’s first term, he then allowed the economy to expand rapidly just in time to carry Reagan to a landslide reelection in 1984.
Is it really true that one person controls the whole economy?
And if so, why does Glass-Steagall matter one way or the other?
How could Volcker on the one hand crash the economy himself, and then immediately un-crash it, while on the other hand being the guardian of Glass-Steagall, supposedly the only defense against... crashing the economy?
This story seems to be more mythmaking than science.
- trendia 9y agoEither this author does not understand basic economics or they are intentionally misrepresenting what Volcker did. Volcker raised interest rates because of 1) high inflation, 2) tight access to capital, and 3) weak US dollar. By any measurement, the US was already in a recession before he even came to office. What this author implies is exactly the opposite of what happened -- that rather than responding to a recession, he created one. And although high interest rates definitely had negative consequences, continuing with the previous mometary policies would have been worse.
- deleted 9y ago[deleted]