Word: feds
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Dates: during 1980-1989
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...central bank, said with evident satisfaction, "Mr. Greenspan is the best successor that the President could have chosen." British Chancellor of the Exchequer Nigel Lawson called Greenspan's appointment an "excellent choice." In the U.S., where Greenspan is much better known, most economic thinkers and money managers hailed the Fed newcomer -- once they had regretted Volcker's departure. Said Frederick Joseph, chief executive officer of the Drexel Burnham Lambert investment firm: "Volcker had credibility. Greenspan will have to grow into it." Agreed Alice Rivlin, director of economic studies at the Brookings Institution and a fellow member of TIME's Board...
...ordinary Americans, much of the fuss about the appointment may have seemed puzzling. Significant as the Fed chairman's actions have often been in U.S. monetary history, the management of the nation's central banking system is shrouded in obscurity. The chairman of the Board of Governors of the Federal Reserve System is one of seven presidential appointees who as a group oversee 25 branches of the central bank, which is organized into twelve districts nationwide.* Ordinary governors serve 14-year terms, while the , chairman is chosen for four years. One purpose of the board is to regulate the behavior...
...Fed's most important mission is to manage the supply of money and credit in the banking system. By controlling the amount of cash available to banks, the Board of Governors affects interest rates and ultimately influences the level of inflation. The discreet actions of the Fed chairman and his colleagues have an impact on everything from the price of bread to the interest rate on a home mortgage...
...Arthur Burns (1970 to 1978) have become nationally renowned monetary policymakers. Volcker may have earned an even mightier reputation for bringing the inflation rate down from 13.3% in 1979, the year he was appointed, to 1.1% in 1986. He consistently managed to persuade the other Fed governors to go along with tough and often unpopular policies. His skills with the board, the public and politicians inspired Economist Jack Albertine, vice chairman of Chicago-based Farley Industries, to call Volcker the "shrewdest bureaucrat in Washington since J. Edgar Hoover...
Another reason for Volcker's status, though, was the absence of any coherent U.S. fiscal policy during most of his tenure. While he presided at the Fed, the U.S. growing budget deficit steadily ballooned, eventually reaching a record $221 billion last year. This year the deficit is expected to shrink only to a still terrifying $175 billion. Volcker's great contribution has been to ensure that the Fed did not crank up the U.S. money supply -- and thus fuel inflation -- to accommodate the budget gap. Instead, the deficits have increasingly been financed by foreigners, chiefly Japanese, who in turn have...