Doug Henwood wrote:
>> I'm touched by the generous interpretations of Paul Volcker's remark, but
his point was to impose austerity on the working class. He was the
commander of a class war from above. ...<<
Right. Volcker didn't want to hurt the incomes of the super-rich. He
wanted to raise them. He doesn't favor lowering US incomes to the
"third world level." Rather, he favors lowering working-class incomes
to that level, if needed.
raghu:
> Fair enough but I am not inclined to say the guy is pure evil and
> every word of his should always be interpreted with the utmost
> cynicism. Maybe if you can provide the context in which he made the
> remark, we may be able to evaluate it better.
No-one says that Volcker is "pure evil." I don't get this practice of
arguing against proposition X by saying that X isn't _completely true_
as if that says that X is totally wrong. Doug criticizes Volcker for
being a Field Marshall of finance capital and someone says "well, he
can't be all bad." (He loves dogs and children after all!) But he can
be a leader of the one-sided class war while being a nice guy on the
personal level.
Interpreting Volcker's words does not involve the "utmost cynicism."
Rather, it involves putting them into context: he's a leader of
finance capital, organized paper wealth. He may be very non-cynical
when considering issues involving the care and feeding of his peers.
Louis:
>Volcker is a very bad guy. In fact, anybody who has ever run the Federal
>Reserve is a skunk.<
What about G. William Miller (who Volcker replaced)? Gerry Epstein has
argued that the banks spurred an informal coup d'état against Miller
because he didn't serve their interests well. This view is reflected
in the article in the Wikipedia seen below. But the article suggests
that he really did not do a good job. In any event, I have a feeling
that any non-skunk who led the Fed would be quickly ousted. It's part
of the job description to be a skunk.
>George William Miller (March 9, 1925 – March 17, 2006) served as the 65th
>United States Secretary of the Treasury under President Carter from August 6,
>1979 to January 20, 1981. He previously served as the 11th Chairman of the
>Federal Reserve, where he began service on March 8, 1978.
>Miller was the first and currently only Federal Reserve Chairman to come from
>a corporate background, rather than from economics or finance. He is also the
>only person to have served both as Federal Reserve Chairman and as Treasury
>Secretary.<
>... Miller succeeded Arthur Burns as Fed Chairman in January 1978. He
>inherited a high inflation economy, still suffering from the increase in oil
>prices from OPEC. The change in the Consumer Price Index was 4.9% in 1976 and
>6.7% in 1977. Nevertheless, Miller maintained a [mis-described] Keynesian
>belief that inflation could "prime the pump" of the economy, and would at any
>rate be self-correcting. He thus pursued a strongly doveish policy and opposed
>raising interest rates. The effect of this was to send the dollar's value
>spiraling downward. In November 1978, only 11 months into his term, the dollar
>had fallen nearly 34% against the German mark and almost 42% against the
>Japanese yen, prompting the Carter administration to launch a "dollar rescue
>package" including emergency sales from the U.S. gold stock, borrowing from
>the International Monetary Fund, and auctions of Treasury securities
>denominated in foreign currencies. This proved only a short-term fix; while
>temporarily steadying the dollar, it soon resumed its fall. The portmanteau
>stagflation, the combination of stagnation and inflation, increased in
>popularity during this time to describe the high rate of inflation that was
>failing to spur the economy.
>Miller's lackadaisical measures against inflation caused distress among
>members of the Carter Administration itself. Treasury Secretary Blumenthal,
>Inflation Adviser Alfred Kahn, and Chief Presidential Economist Charles
>Schultze all advocated for increasing the interest rate prior to the April
>1979 meeting, where Miller opposed such measures. Carter had to admonish his
>own staff over the press leaks used to carry on the dispute.
>Miller was not perceived as having great prestige; not coming from an
>economics or Wall Street background, he was seen as an "outsider." A 2003
>article in The Economist said that "America's central bankers have all made
>their weight felt across the political sphere, with the possible exception of
>William Miller, whose brief tenure in 1978-79 was notable for his attempts to
>ban smoking at the board." It is rare for the influential chair's opinion to
>not carry the vote at the Federal Reserve's meetings, but Miller was outvoted
>by the Board of Governors at a meeting in 1979 where he opposed an increase in
>the discount rate, the rate at which the Federal Reserve lends to banks.
>Economic historians have generally considered Miller's short tenure
>unsuccessful. The high inflation that Miller allowed required harsh "shock
>therapy" treatment by his successor Paul Volcker to bring under control, which
>sent the U.S. economy into recession from 1980-1982. Steven Beckner, a Federal
>Reserve analyst, offered a particularly harsh assessment:
>>Under Arthur Burns, who chaired the Fed from 1970 to 1978, and under G.
>>William Miller, who was chairman from January 1978 to August 1979, the Fed
>>provided the monetary fuel for an inflation that began as a flicker and grew
>>into a fearsome blaze... If Nixon appointee Burns lit the fire, Miller poured
>>gasoline on it during the administration of President Jimmy Carter. Without
>>question the most partisan and least respected chairman in the Fed's history,
>>this former Textron executive worked in tandem with fellow Carter appointee,
>>Treasury Secretary W. Michael Blumenthal, in pursuit of monetary policies
>>that were expansionist domestically and devaluationist internationally. The
>>goals were to spur employment and exports, with little thought to the
>>dollar's value. By early 1980, inflation was running at 14 percent.<<
—Steven Beckner, Back from the Brink: The Greenspan Years<
--
Jim Devine / "Nobody told me there'd be days like these / Strange
days indeed -- most peculiar, mama." -- JL.
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