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My view isn't full of praise. My family was really affected by the recession he caused. The recession was brutal and lots of people never worked again - it caus

by rb808 7y ago

My view isn't full of praise. My family was really affected by the recession he caused. The recession was brutal and lots of people never worked again - it caused a lot of pain and despair. Everyone talks about how taming inflation is so wonderful. Taming mostly benefited the wealthiest - as interest rates have tumbled asset prices have soared in value. Ever since working people's salaries have stagnated. Ironically now people are worried about deflation.

claudeganon 7y ago
Well said. As setpatchaddress highlighted downthread, Volker was responsible for undoing the socioeconomic order the New Deal put in place, setting the stage for our new gilded age and all the political and economic chaos that has come with it: https://mobile.twitter.com/matthewstoller/status/1204057385662320641 https://mobile.twitter.com/matthewstoller/status/12040573856...
- pcurve 7y ago
  Seems like you are getting downvoted and I don't really understand why. You expressed your view in a civil way and linked to an interesting tweet.
big_chungus 7y ago
Your experience is anecdotal, and whether inflation helps or hinders is still up for debate by economists [0]. Remember that many of the poorest do not keep assets in banks, let alone in stocks or other assets that appreciate or keep pace with inflation. Every recession causes pain, and no one man can cause a recession. I doubt we'll ever have enough data to determine if a given policy during a past recession helped or hindered. [0] https://fivethirtyeight.com/features/inflation-may-hit-the-poor-hardest/ https://fivethirtyeight.com/features/inflation-may-hit-the-p...
ajna91 7y ago
If this[1] is to be believed, Volcker intentionally targeted working people's salaries. > Volcker said that the prosperity of the 1950s and 1960s was a "hall of mirrors" and that the "standard of living of the average American must decline." > Volcker angered Reagan officials by keeping interest rates too high. When they complained he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” 1. https://twitter.com/matthewstoller/status/1204065262695256064 https://twitter.com/matthewstoller/status/120406526269525606...
- ep103 7y ago
  I'm a software engineer, but I've started reading about this time period recently. I don't understand most of it, but what appears to be obvious, is that stagflation was largely a fight between capital and labor. Volker ruled in favor of capital, and crushed labor.
  - mixmastamyk 7y ago
    Inflation also benefits debtors at the expense of creditors. That's why the government likes having a certain amount. Benefits not as one-sided as you might think. OT: Is that the best picture they could have used?
ep103 7y ago
"Other People's Blood". “...to establish its credibility, the Federal Reserve had to demonstrate its willingness to spill blood, lots of blood, other people’s blood.” - Reagan’s economic adviser Michael Mussa on Volker https://nplusonemag.com/issue-34/reviews/other-peoples-blood-2/ https://nplusonemag.com/issue-34/reviews/other-peoples-blood... I've been desperate to learn more about this since watching Mark Blyth's talk "A Brief History of How We Got Here and Why" (https://www.youtube.com/watch?v=tJoe_daP0DE&t=1243s https://www.youtube.com/watch?v=tJoe_daP0DE&t=1243s) And while Blyth takes the opinion that Volker and Friedman were just the next steps in the evolution of capitalism, and I am still desperately lacking knowledge about this context, I can't help but have a feeling that if the future is continues with worsening inequality and political instability in a neoliberal context, we'll look back and be able to say it started with Volker.
- claudeganon 7y ago
  It’s actually older and dates back to early 20th century ordoliberal ideology. Essentially, their idea was that it’s more important to protect global Capitalism than local democracy, so when the two come in conflict, global Capitalism should be made to prevail through parallel, extranational institutions. Quinn Slobodian wrote a whole book about it called “Globalists” and did a great synopsis interview about it on the Dig podcast: https://www.thedigradio.com/podcast/a-history-of-neoliberalism-with-quinn-slobodian/ https://www.thedigradio.com/podcast/a-history-of-neoliberali...
dnautics 7y ago
Not sure if you know this, but dropping interest rates is a policy that is strictly speaking opposed to taming inflation. It in fact creates inflation. You might have your history wrong? > Everyone talks about how taming inflation is so wonderful. Taming mostly benefited the wealthiest - as interest rates have tumbled asset prices have soared in value. After Volcker's deflationary policy, the authorities got scared from a small bump, instituted a reactionary inflationary policy, and that inflation has helped the wealthiest. > Ever since working people's salaries have stagnated. That is a designed consequence of inflation: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Or, to put it differently, inflation is necessary to cheat the working class out of the value of their money, in the name of posting good employment numbers. (https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law on a societal scale)
- bullen 7y ago
  > Not sure if you know this, but dropping interest rates is a policy that is strictly speaking opposed to taming inflation. It in fact creates inflation. You might have your history wrong? Doesn't this depend on how much of the money supply is debt? I agree that dropping interest below zero when 99% of the money is debt can be inflationary, but back then maybe most money was "real" (not debt) and then dropping interest would have been deflationary?
  - rb808 7y ago
    Money==Debt by definition. Except back in the gold standard perhaps.
  - rurhdheiwk 7y ago
    Shut the fuck up, you have no idea what you're talking about and should be "ashamed" (not proud) of speaking like you do.
  - 7y ago
RickJWagner 7y ago
I remember it differently. There was 'stagflation' then, which made things more expensive as jobs became more scarce. It was slowly strangling the wealth out of everyone. After Volcker killed inflation, the economy boomed through the 80s and into the 90s. It was a great time, right up until the crash of 2000 stopped it all. I'm sorry your family was negatively affected. But please know for most people (this is assuredly provable by Ronald Reagan's re-election margin) found the policies an improvement.

by rb808 7y ago

claudeganon 7y ago

Well said. As setpatchaddress highlighted downthread, Volker was responsible for undoing the socioeconomic order the New Deal put in place, setting the stage for our new gilded age and all the political and economic chaos that has come with it: https://mobile.twitter.com/matthewstoller/status/1204057385662320641 https://mobile.twitter.com/matthewstoller/status/12040573856...

pcurve 7y ago
Seems like you are getting downvoted and I don't really understand why. You expressed your view in a civil way and linked to an interesting tweet.

big_chungus 7y ago

Your experience is anecdotal, and whether inflation helps or hinders is still up for debate by economists [0]. Remember that many of the poorest do not keep assets in banks, let alone in stocks or other assets that appreciate or keep pace with inflation. Every recession causes pain, and no one man can cause a recession. I doubt we'll ever have enough data to determine if a given policy during a past recession helped or hindered. [0] https://fivethirtyeight.com/features/inflation-may-hit-the-poor-hardest/ https://fivethirtyeight.com/features/inflation-may-hit-the-p...

ajna91 7y ago

If this[1] is to be believed, Volcker intentionally targeted working people's salaries. > Volcker said that the prosperity of the 1950s and 1960s was a "hall of mirrors" and that the "standard of living of the average American must decline." > Volcker angered Reagan officials by keeping interest rates too high. When they complained he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” 1. https://twitter.com/matthewstoller/status/1204065262695256064 https://twitter.com/matthewstoller/status/120406526269525606...

ep103 7y ago
I'm a software engineer, but I've started reading about this time period recently. I don't understand most of it, but what appears to be obvious, is that stagflation was largely a fight between capital and labor. Volker ruled in favor of capital, and crushed labor.
- mixmastamyk 7y ago
  Inflation also benefits debtors at the expense of creditors. That's why the government likes having a certain amount. Benefits not as one-sided as you might think. OT: Is that the best picture they could have used?

ep103 7y ago

"Other People's Blood". “...to establish its credibility, the Federal Reserve had to demonstrate its willingness to spill blood, lots of blood, other people’s blood.” - Reagan’s economic adviser Michael Mussa on Volker https://nplusonemag.com/issue-34/reviews/other-peoples-blood-2/ https://nplusonemag.com/issue-34/reviews/other-peoples-blood... I've been desperate to learn more about this since watching Mark Blyth's talk "A Brief History of How We Got Here and Why" (https://www.youtube.com/watch?v=tJoe_daP0DE&t=1243s https://www.youtube.com/watch?v=tJoe_daP0DE&t=1243s) And while Blyth takes the opinion that Volker and Friedman were just the next steps in the evolution of capitalism, and I am still desperately lacking knowledge about this context, I can't help but have a feeling that if the future is continues with worsening inequality and political instability in a neoliberal context, we'll look back and be able to say it started with Volker.

claudeganon 7y ago
It’s actually older and dates back to early 20th century ordoliberal ideology. Essentially, their idea was that it’s more important to protect global Capitalism than local democracy, so when the two come in conflict, global Capitalism should be made to prevail through parallel, extranational institutions. Quinn Slobodian wrote a whole book about it called “Globalists” and did a great synopsis interview about it on the Dig podcast: https://www.thedigradio.com/podcast/a-history-of-neoliberalism-with-quinn-slobodian/ https://www.thedigradio.com/podcast/a-history-of-neoliberali...

dnautics 7y ago

Not sure if you know this, but dropping interest rates is a policy that is strictly speaking opposed to taming inflation. It in fact creates inflation. You might have your history wrong? > Everyone talks about how taming inflation is so wonderful. Taming mostly benefited the wealthiest - as interest rates have tumbled asset prices have soared in value. After Volcker's deflationary policy, the authorities got scared from a small bump, instituted a reactionary inflationary policy, and that inflation has helped the wealthiest. > Ever since working people's salaries have stagnated. That is a designed consequence of inflation: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Or, to put it differently, inflation is necessary to cheat the working class out of the value of their money, in the name of posting good employment numbers. (https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law on a societal scale)

bullen 7y ago
> Not sure if you know this, but dropping interest rates is a policy that is strictly speaking opposed to taming inflation. It in fact creates inflation. You might have your history wrong? Doesn't this depend on how much of the money supply is debt? I agree that dropping interest below zero when 99% of the money is debt can be inflationary, but back then maybe most money was "real" (not debt) and then dropping interest would have been deflationary?
- rb808 7y ago
  Money==Debt by definition. Except back in the gold standard perhaps.
- rurhdheiwk 7y ago
  Shut the fuck up, you have no idea what you're talking about and should be "ashamed" (not proud) of speaking like you do.
- 7y ago

RickJWagner 7y ago

I remember it differently. There was 'stagflation' then, which made things more expensive as jobs became more scarce. It was slowly strangling the wealth out of everyone. After Volcker killed inflation, the economy boomed through the 80s and into the 90s. It was a great time, right up until the crash of 2000 stopped it all. I'm sorry your family was negatively affected. But please know for most people (this is assuredly provable by Ronald Reagan's re-election margin) found the policies an improvement.