Greenspan garners all the credit for the low interest rates
of the past 20 years. We believe the chart below proves otherwise. The Oil
shock in the 1st half of the 1970s gave way to inflation shock of the 2nd half.
Source: RCP, Economagic
When Volcker was appointed Fed Chair, inflation was in the
double digits and growth was stagnant. He forced unpleasant medicine down the
gullet of the American economy, limiting the growth of the money supply and
abandoning interest rate targeting. Inflation, which had peaked at 13.5% in
1981, was down to 3.2 percent by 1983.
Quote of the Day:
“A wise observer of the economic scene once commented that
‘what can be left to later, usually is – and then, alas, it’s too late.’”
–Paul Volcker, Federal Reserve Chairman, 1979-87