[quote=XBoxBoy][quote=EconProf]Given recent inflation numbers, this cannot last, as history sadly shows. The parallels between Biden and Fed chairman Powell and President Carter and Fed Chairman Arthur Burns are uncanny. The stagflation that followed those two lasted for years.[/quote]
Haha! What a clown comment! And from someone who uses EconProf as their handle.
Let’s get a couple facts straight. Arthur Burns first major govt office was Counselor to the President in 1969. And was that for President Carter? NOPE! That was for President Nixon! Then in 1970 Arthur Burns became Chairman of the Fed. Again while Nixon was president.
As inflation started to heat up, Nixon and Burns (Not Carter and Burns) imposed wage and price controls in 1971. This didn’t work so well but undeterred Nixon engaged in lots of deficit spending and then took the dollar off the gold standard. And then Nixon pressured Burns to loosen the money supply so that the economy would boom and Nixon would get reelected. In 1973 inflation had reached 8%. This wasn’t it’s peak, but keep in mind Carter is only the Governor of Georgia at this time.
Things only get worse re inflation for the next several years reaching 12% in 1974. (And worse for Nixon too as he is forced to resign leaving Gerald Ford president.)
January 20, 1977 Jimmy Carter takes over the presidency. A little more than a year later Arthur Burns is out at the fed. Replaced by William Miller, and thus ending any partnership between Carter and Burns. Another year later (Aug. 6, 1979) Paul Volker takes over as Chairman of the Fed Reserve.
So, let’s get this straight:
1970: Nixon appoints Arther Burns Chairman of Fed Reserver
1970-1974: Inflation starts to heat up under Nixon/Burns partnership that includes deficit spending, price and wage controls and taking the dollar off the gold standard.
1974-1976: Ford is president with Arthur Burns still the Fed Chairman. During this time inflation first rises to 12% but falls to 5% by late 1976
1977: Carter becomes president and Arthur Burns remains Chairman of the federal reserve. This partnership you want to blame everything on lasts only 14 months.
1979: Carter nominates Paul Volker to be new Chairman of Federal Reserve. (Volker is generally considered to be the man who tamed the 1970’s inflation)
Given all the above, it is stunning, yes absolutely stunning that someone who claims to be an economics professor would make such a misleading claim that inflation in the 1970s was largely the result of Carter and Burns. If anything you should be blaming Nixon and Burns. Nixon is the one who nominated Burns and had a long partnership with him. Carter should be paired with Volker who he nominated.
Of course that doesn’t fit with your completely delusional political views so I guess we shouldn’t be surprised. But really, it’s time to stop making shit up and stop spreading misinformation.[/quote]
XBoxBoy:
Your history is largely correct, but it does not relate to what I said.
The parallels of that period to today in terms of policy and resulting inflation and all that it entailed are strikingly similar. Yes, we had big deficit spending combined with rapid increases in the money supply (M2). Inflation skyrocketed and so did interest rates. Stagflation (recession combined with inflation) resulted.
Today deficit spending relative to GNP and the total federal debt is unprecedentedly high, even higher than during the previous period, and is not needed to stimulate the economy. The Fed is accommodative with ultra loose money supply and low interest rates, just like Arthur Burns was. Like today’s Fed Chairman Powell, Burns said the inflation was only “temporary”, and due largely to oil prices.
I suspect this is the consensus opinion of most economists today, of whatever political stripe. Rich T. feel free to weigh in here.
